Citizens Financial Group Inc.’s headquarters holds a prominent place in downtown Providence. The 13-story building stands guard over the confluence of the Woonasquatucket and Moshassuck rivers at the head of the Providence River.
But as Citizens continues to gobble up banks across the region, with two recent bank acquisitions projected to give it a big chunk of deposits in the New York City metro area, where the financial institution has designated its home base seems less and less prominent.
In an April call with investors following the company’s first-quarter earnings, CEO and President Bruce Van Saun said he hopes to replicate
in New York what the company has already established in Boston and Philadelphia. At no point during the call did he mention Providence or Rhode Island.
Whether that means the Fortune 500 company has forsaken its Rhode Island roots depends on who you ask. Either way, they may not care.
“A local headquarters market will always hold a significant place in a company’s history and base of operations,” said R. Scott Siefers, managing director and senior research analyst at Piper Sandler Cos., which covers Citizens, among other banks. “As the business of banking evolves, geographic presence is less significant than it was in the past, perhaps more of a symbolic thing.”
Indeed, banking by phone or online has replaced traditional in-branch visits for many customers, especially the younger generation. A December study from Citizens found that 9 in 10 consumers, and nearly as many businesses, do at least some banking digitally and plan to make that habit permanent.
Convenience trumps all else, and the buying spree Citizens has embarked upon in recent years only helps the company improve its offerings for customers, whether it be more competitive ending rates or wealth management and merger and acquisition advisory, said Peter Nigro, the Sarkisian chair of financial services at Bryant University.
“For the most part, with the consolidation of industry, banks that can offer services more conveniently are going to be the ones that survive,” Nigro said.
But Edward O. Handy III, chairman and CEO of Washington Trust Bancorp Inc., parent of The Washington Trust Co., sees it differently. The Westerly-based community bank has brought in more customers – and deposits – by adding brick-and-mortar branches because customers want that local personal feel, Handy said.
And as Citizens shifts its attention elsewhere, Handy sees an opening to dethrone Citizens – which reigns No. 1 in the state with 37% of in-state deposits – or at least knock it down a few pegs.
“It’s reasonable to assume that with their focus broadening out, we’ll have opportunities to take aim at market share growth,” Handy said. “If their focus is diverted … maybe that will bring us some wins.”
No matter how smoothly an acquisition goes, the initial transition always requires some kind of temporary “refocus,” and in a crowded market, competitors will seize on that moment, Siefers said.
But will Citizens customers jump ship? Probably not.
“Banks really have to do something wrong to lose customers typically,” Siefers said. “I don’t think the Citizens service model has diminished at all with this geographic expansion. Unless the company takes its eye off the ball in a way that’s surprising, I don’t think that’s a large risk.”
Small businesses might place more importance on having a local bank than retail customers do. But even then, assuming their local lender isn’t changing, what happens at the top of the food chain shouldn’t affect them much, Siefers said.
By some measurements, Citizens hasn’t been a local bank for decades.
“They had the moniker of a local bank, but it was kind of in name only,” Nigro said.
Founded in Providence in 1828, originally as High Street Bank, Citizens was acquired by the Royal Bank of Scotland in 1988, where it remained a subsidiary until its initial public offering in 2014. By the time the Scottish bank sold its final shares of Citizens in 2015, the company had rapidly expanded its regional presence. Regional growth intensified after the initial public offering of stock with the $511 million acquisition of Franklin American Mortgage in 2018. And in 2021, Citizens had deals to acquire East Coast branches of HSBC U.S. Bank N.A. and Investors Bancorp, among others.
Keith Kelly, Rhode Island president for Citizens, insisted that the company’s increasing focus on other markets has not diminished its local presence and services.
“For many Rhode Islanders, we are their local bank and offer an approach that we believe sets us apart from other banks – great capabilities combined with human touch,” Kelly said in an emailed statement. Kelly described the company’s commitment to Rhode Island as “unwavering.”
Indeed, Citizens opened a $285 million, 123-acre corporate campus in Johnston in 2018.
But Rhode Island can hardly compare with the booming financial hubs in Boston or New York City, and at some point, that local commitment may go by the wayside, said Michael Ice, a senior finance lecturer at the University of Rhode Island’s College of Business Administration.
“If they begin to build a footprint as big as some of these other major national players, they’ll be hard-pressed to stay in Rhode Island,” Ice said.
Asked about the possibility of moving the Citizens headquarters out of state, Citizens said there were no plans to move its headquarters.
