Handy to see banking industry from new perspective

Handy
Handy

The move of Edward O. “Ned” Handy III from his position as Citizens Bank president for Rhode Island and Connecticut to The Washington Trust Co. as president and chief operating officer suggests more than the transition of a well-respected banking executive from one financial institution to another.
Handy’s move invites a look at the banking landscape in which the move takes place and the vastly different profiles of the banks.
Westerly-based Washington Trust has grown carefully and steadily under the leadership of Chairman, President and CEO Joseph J. MarcAurele into its solid position as the largest Rhode Island-based community bank. In hiring Handy it sets up a potential line of leadership succession, offering further stability in an ever-changing banking environment.
Providence-based Citizens Bank has the international advantage of being European-owned, but that ownership brings with it local uncertainty over the future of parent company Royal Bank of Scotland, which had an infusion of $71 billion from the British government in 2008 that gave it an 82 percent share of ownership in RBS. Other factors of change at work in the umbrella Citizens Financial Group include the announced retirement of Chairman and CEO Ellen Alemany, who was due to turn over the leadership to Bruce Van Saun Oct. 1, and RBS’ announced IPO planned for 2015.
The 52-year-old Handy, a resident of East Greenwich, will see the local banking landscape from a different perspective when he assumes his position at Washington Trust at the end of November. Handy will not be available for comment until then, according to the bank, which announced his appointment Sept. 20.
MarcAurele will turn over the job of president to Handy, but retain the position of chairman and CEO.
Handy’s annual salary will be $385,000 and beginning in 2014, he will be eligible for incentive compensation with a target bonus of up to 40 percent of his salary, according to documents filed Sept. 25 with the Securities and Exchange Commission.
Handy will receive a hiring bonus of $100,000 in January 2014. He will also be granted 3,500 restricted stock units of Washington Trust Bancorp, Inc. that will become vested after five years of employment. “The idea is for Ned to primarily take over the business units – the revenue-generating units of the company – and to provide more management depth,” MarcAurele told Providence Business News last week.
“As these businesses get more and more complicated, we really need to make sure we have adequate management firepower,” he said. “Our business is changing rapidly, both from a technological perspective and just from an everyday business-delivery perspective.
“What this will do is provide me with more time to think about the company strategically, although I’ll still be very involved in many aspects of the day-to-day running of the company,” said MarcAurele.
Washington Trust had been planning to divide up some of the leadership and Handy was a natural choice, said MarcAurele.
“Normally, a company of our size would have both a chairman and CEO, as well as a president and chief operating officer,” he said.
Both men worked at the former Fleet Bank and were colleagues at Citizens Bank for more than 15 years.
When MarcAurele made the move to Washington Trust in 2009, Handy moved up to replace him as president of Citizens Bank in Rhode Island. Now Handy follows MarcAurele on the path to Washington Trust.
“I think this is a real opportunity for us to get a proven leader in the market … as we provide for ongoing leadership,” said MarcAurele. “We’re essentially also trying to provide the potential for some succession in the company. I am 62 and at some point, we all have to retire, although I’m not contemplating that right now.”
Damon Delmonte, senior vice president of equity research at New York-based, Keefe, Bruyette & Woods, a boutique investment bank and broker-dealer that specializes in the financial-services sector, thinks Handy will be a good fit for Washington Trust.
“He will be able to leverage the relationships he’s built over the years at Citizens and bring them over to Washington Trust,” he said.
The comparative profiles of the two banks could have been a factor in Handy’s move, said Delmonte, who works from Keef, Bruyette & Woods’ Hartford, Conn., office and is familiar with RBS Citizens operations. “Obviously there’s a lot of turmoil going on over there. There’s been a lot of transition. There’s always speculation as to what RBS will do with the Citizens franchise,” Delmonte said. “Will they try to sell it off to a large U.S. bank or another national bank? Will they try to IPO it? That answer remains unknown at this point, at least to the general public.”
Over the course of his work, Delmonte has seen other bankers leave Citizens.
“There have been a lot of lenders who have chosen to leave Citizens because of the ongoing moving parts. I think people try to get out of that kind of environment and find something that’s a little bit more stable and more productive, from a work standpoint.”
While Citizens is a larger bank, its lenders who work in an area such as Rhode Island and Connecticut are often targeting the same customers as smaller banks in that area, said Delmonte.
“What may be different is the size of the relationship you’re trying to attract. Obviously, Citizens, given the size of its balance sheet, they are able to make much larger loans than someone like a Washington Trust,” said Delmonte. ”But that doesn’t mean you’re not able to attract talent from Citizens that focuses on the same size loans you’re working on at Washington Trust.”
MarcAurele knows from his own experience that each of the banks has its advantages.
“Citizens is obviously very large and very dominant in this market. They have a terrific franchise,” said MarcAurele. “There is an element of change that’s going to go on there that has a lot to do with the size of the company and the fact that the Royal Bank of Scotland is also large and has had some difficulties, as a lot of large banks have had.
“The difference at a place like Washington Trust is that it’s local and you can deliver service locally,” he said.
When asked about plans to replace Handy, RBS Citizens Financial Group spokeswoman Lauren DiGeronimo on Sept. 24 would say only, “We expect to name a new president soon.” •

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