Monday, August 3, 2015

Sunday Globe Special: Bankers Make Good Citizens

Sorry I'm so late getting you this piece:

"A new leader works on reshaping Citizens Bank" by Deirdre Fernandes Globe Staff  July 12, 2015

A washing machine spun loudly at a homeless shelter as workers mopped floors to prepare for the men and women who would line up for a hot meal and safe cot. Nearby, in a dimly lit room crammed with bunk beds, Bruce Van Saun stood in his impeccably tailored suit and silk tie, looking as if he may have wandered into the wrong place.

Father Bill’s Place, a Quincy shelter, isn’t normally where you would find the chief executive of one of the nation’s largest banks. And it is miles away from the London and New York boardrooms where Van Saun crafted a decades-long career in investment and global banking.

But almost two years after taking the helm of Providence-based Citizens Financial Group Inc., stops at homeless shelters and food banks are an increasing part of Van Saun’s packed schedule as he tries to rejuvenate the bank’s sluggish performance as well as its community image.

The 58-year-old Van Saun spent years behind the scenes digging through financial data and pitching investors; now he is the public face of Citizens, reaching out to a broader audience of customers, employees, politicians, and community leaders.

“We need to make sure we are dominant in our home area,” Van Saun said in a recent interview. “What we want to do is grow.”

Van Saun is leading Citizens through a crucial time as it makes the transition from a foreign-owned subsidiary to an independent, publicly traded US corporation. Royal Bank of Scotland PLC, which owned Citizens for more than a quarter-century, has sold its majority stake in two rounds of stock offerings since the end of last year and plans to divest its remaining 41 percent by the end of 2016.

Van Saun, who previously worked as Royal Bank of Scotland’s finance director, was sent to Citizens to get the bank ready for sale by trimming costs and boosting profits. He has since launched Citizens into several new markets, such as student loans, and expanded auto and mortgage lending.

He sold off 100 poorly performing Chicago area branches of Charter One, a Midwestern franchise that Citizens bought in 2004, an acquisition analysts have said was ill-advised and dragged down earnings. Van Saun also rebranded the remaining Charter One operations under the Citizens name. And he has hired executives from some of the nation’s biggest banks, including Citigroup Inc. and JPMorgan Chase & Co., for his leadership team.

“There’s still a significant amount of work to do,” Van Saun said at a recent investor conference in New York.

But colleagues and former bosses say Van Saun is the man for the job. Milton Berlinski, an investment banker and co-founder of Reverence Capital Partners in New York, has worked with Van Saun for more than a decade. He described Van Saun as a strategic, no-nonsense executive who understands his business and knows how to succeed.

“He’s a roll-up-his-sleeves type,” Berlinski said. “He identifies the dollars, the nickels and the dimes, and the pennies. He is good at analyzing where the bank’s making money and where it’s not.”

Van Saun, a New Jersey native, traces his family roots in the state to Dutch immigrants who settled there in the 1700s. George Washington is believed to have slept in the house his grandfather owned.

His grandfather was also a banker, and Van Saun studied business at Bucknell University in Pennsylvania and the University of North Carolina, where he earned his MBA. His first job was as financial planner and analyst for food maker General Mills Inc. of Minneapolis. He then worked for the securities firm Kidder, Peabody & Co. and investment bank Wasserstein Perella & Co., which took part in many of the biggest mergers and acquisitions of the 1990s.

From there, he became chief financial officer at Deutsche Bank North America, a subsidiary of Deutsche Bank AG of Germany, then the Bank of New York, where he helped guide its 2007 merger with Mellon Financial Corp.

He was known for doing his homework on any deal in which he was involved and insisting that others on the team be just as well schooled.

Gunnar Overstrom, a managing partner of Three Corner Global, an New York investment firm, was an adviser for Bank of New York when Van Saun was chief financial officer. If people showed up unprepared, Overstrom said, Van Saun would let them know it was unacceptable.

“He’s pretty direct,” Overstrom said. “Typically, you got on board with how he did things, or you left.”

Van Saun joined Royal Bank of Scotland in 2009, the year after the global financial crisis pushed the company to the brink of failure and drove the British government to take control of the bank in a $70 billion taxpayer bailout. His job: help turn around the bank.

Related: HSBC and Beyond

As the economy and the bank’s finances stabilized, the British government pressured RBS to sell Citizens and repay taxpayers. RBS turned to Van Saun to get Citizens in shape for a public stock offering.

No easy task. Citizens, with $136.5 billion in assets, is the nation’s 13th-largest retail bank, but has underperformed in recent years and lost top managers to competitors. Its returns on equity averaged below 5 percent from 2010 to 2013, compared with many other large regional banks that earned closer to 10 percent.

Citizens was hurt by its portfolio of subprime mortgages, a chunk held by Charter One, and by neglect from its parent, RBS, which had its own problems in the United Kingdom.

The bank’s shares were priced in September 2014 at $21.50, below initial projections. It has since risen by more than 25 percent, and closed Friday at $27.20, a sign that Citizens is on the right path, bank officials said. Its return on equity was 6.7 percent last year, according to financial filings.

Pat Rohan, a managing director of FinPro Inc., a bank consultant in New Jersey, said Van Saun’s plan to increase mortgage lending and move into riskier, but potentially more profitable segments of auto lending is a sound approach to boosting returns.

Nothing has changed, folks. It's the $ame old $hell game.

But banking is not just about offering the right products, analysts said. Bankers also must build relationships where they operate, so consumers and businesses think of them when they want to borrow or invest.

They want to $crew you.

“The success for any bank to grow is to establish ties to the communities,” Rohan said. “That requires boots on the ground.”

Good God, a war metaphor! Why not!

Before the financial crisis, Citizens was a high-profile player in Greater Boston and other communities, despite its British ownership. Executives sat on nonprofit boards ranging from the United Way to the Boston Symphony and were on annual lists of the city’s power players.

But Boston banker Lawrence Fish, who had built the bank into a regional presence and was at one point paid more than his boss in the UK, stepped down as chief executive in 2007, the financial crisis followed, and Citizens pulled back. The bank’s charitable giving, for example, dropped 36 percent from $25 million in 2007 to $16 million in 2012.

Local charities and civic groups haven’t known whom to approach at Citizens for support on community initiatives, said Paul S. Grogan, president of The Boston Foundation, a major charitable group in the city. “It was hard to define what they were up to,” Grogan said.

Van Saun said he is working to get the right people in leadership positions to make sure the bank meets the needs of its customers and communities. He still lives with his wife in New Jersey, but works out of the bank’s main offices in Providence and Stamford, Conn.

Van Saun said Citizens’ success will ultimately be about execution, and he has shifted his focus from separating from RBS to improving service and products at Citizens.

“I think the main switch was going from defense to offense,” Van Saun said. “I want Citizens to be regarded as a top performing regional bank.”


Sorry for not being into the fawning profile piece that is served up every week. Were I an elite of Bo$ton or New England, it would be very good Sunday fare. I'm not.

And about those communities:

"New N.H. bank bucks the trend" by Deirdre Fernandes Globe Staff  August 01, 2015

BEDFORD, N.H. — Something unusual happened in this quiet town Friday that warranted the appearance of the governor, both US senators, and a cadre of business leaders: a new bank opened.

The institution, Primary Bank, is small enough by most standards to go unnoticed. It only has one branch and under $30 million in assets, less than a half percent of total New Hampshire bank assets. And the founders, more comfortable in khakis than suits, aren’t out to revolutionize the industry with the latest mobile phone application.

But in the aftermath of the Great Recession, the near collapse of the banking system, and the financial reforms that followed, simply opening a brick-and-mortar, community bank is enough to make national headlines and draw the attention of politicians and even campaigning GOP presidential contenders.

Primary Bank is only the fourth new bank to open in the country since 2010 and the sole one to do so this year. Prior to 2008, on average 100 banks received charters every year.

“This is really exciting news not just for Bedford, or New Hampshire, but for the country,” US Senator Jeanne Shaheen told a crowd gathered in front of the bank in a shopping center along Route 101.

Bill Greiner, a local restaurant owner and founder of the bank, said he wanted to open a local bank focused on lending to area small businesses. Some of the banks he had deposits with and received loans from had in recent years been sold to bigger banks, he said, or were constrained from making loans because their parent company had problems elsewhere in the country or world and didn’t want to take on any additional risks.

Three New Hampshire banks have been swallowed by larger financial institutions in the past three years. Most recently, Eastern Bank, the largest community bank in Massachusetts, entered the New Hampshire market with its purchase in 2014 of Bedford-based commercial lender Centrix Bank & Trust.

“When you’re part of a bigger bank, you are focused on bigger deals,” Greiner said. “We saw an opportunity.”

But persuading others, especially investors, that a new bank is a good bet was a challenge.

“It’s a harder sell,” said Pat Rohan, a managing director for New Jersey-based FinPro Inc., a consulting company that worked with Primary Bank. “Investors are wary.”

That may be why so few banks have been launched in recent years, regulators and bank experts said.

They blame a number of factors, from the weak economy and low interest rates that have cut into bank profits, to stricter oversight and higher capital requirements, that increase costs.


Unlike older, more established banks, Primary also doesn’t have the additional expense of replacing technology, so it can keep some of its costs down, Greiner said.

Whether there will be a market for another bank, even with its intensely local focus, remains to be seen. Eastern Bank has done well since entering the New Hampshire market, said Andy Ravens, a spokesman for the Massachusetts institution. The bank had the best June for small business lending since Centrix was founded in 1998, he said.

“We’re out there, we’re lending,” Raven said. “We’re not aware of a lot of folks out there who are qualified not getting cash.”

Still, other banks say Primary could have a shot at grabbing some of the market. Two other banks, Bangor Savings Bank in Maine and Hyde Park-based Blue Hills Bank, have invested in Primary.

William Parent, the president of Blue Hills, said southern New Hampshire is a growing market that isn’t saturated with community banks and the investment is a way for his bank to enter the community without all the overhead costs.

Primary will only be able to lend up to $4 million for each borrower, but if a customer needs more it can bring in Blue Hills or Bangor Savings .

“It’s a good investment,” said Parent. “I’m not sure I’d be an advocate [of new] banks in Eastern Mass. There’s enough competition, even too much competition, here.”

And if Primary’s leaders ever decide to sell the bank several years down the road, Blue Hills will have built relationships with the bank’s leadership and its customers, Parent said.

OMG, they just opened and the Globe is already talking sale!

Primary Bank officials said any discussions about selling the bank are premature. Any decisions on the bank’s future will be made by directors and shareholders, most of whom are from New Hampshire, they said....


Also see:

"Andrew Terrat used to be a banker, so he knows a thing or two about.... furniture."

It really is a banker's paper.

NDU: N.H. food bank to launch food processing plant