Friday, May 26, 2006

Citigroup Entering TD Banknorth's Markets

AP, 26 May 2006

Citigroup Inc. is entering the highly competitive Boston and Philadelphia retail-banking markets, with plans to open several branches in each city this year and then expand in the future.

The forays into Boston and Philadelphia are part of an ambitious retail growth plan that Citigroup Chief Executive Charles Prince unveiled late last year.

The New York bank, the world's largest, expects to open up to 100 new bank branches in the United States this year.

The goal is to beef up Citigroup's lackluster retail presence in its current footprint and also to jump into new regions where it can offer banking services to its existing credit-card, student-loan and automobile-finance customers.

Citigroup's expansion plans have gotten off to a sluggish start. The company opened just 11 new branches in the first quarter and sold 21 branches in upstate New York to M&T Bank Corp. The slow pace has fueled speculation that Citigroup will turn to a retail acquisition.

Citigroup spokesman Robert Julavits said Friday that the company will open a "handful" of branches each in Boston and Philadelphia. The Boston Globe reported Friday that Citigroup has selected sites for four branches in downtown Boston, which Julavits confirmed. He wouldn't provide details about Citigroup's longer-term aspirations in either city, beyond saying that "the plan is to expand our presence."

New Jersey is another focal point for Citigroup. Despite being within sight of Citigroup's Manhattan headquarters, New Jersey is home to just four of the company's bank branches, Prince said in December. The company plans to open 15 to 20 new branches there this year, Julavits said.

Citigroup's selection of Boston and Philadelphia as the two new markets to enter this year isn't a big surprise, given their proximity to Citigroup's core New York market and their high-profile banking markets. Prince has noted that Citigroup has many consumer-finance customers in the two cities.

But starting from scratch in either market won't be easy, since a cluster of big banks already have amassed imposing positions.

The Boston metropolitan area is dominated by two players: Bank of America Corp., which had 218 branches and more than 22 percent of the deposits as of June 30, 2005, and Citizens Bank, a Royal Bank of Scotland Group PLC unit with 198 branches and a roughly 16 percent market share, according to the Federal Deposit Insurance Corp. Two other banks -- Sovereign Bancorp Inc. and TD Banknorth Inc. -- also boast more than 100 branches each in the metro area and have been expanding rapidly.

Philadelphia is similarly concentrated. Four banks -- Wachovia Corp., Citizens, Sovereign and PNC Financial Services Group Inc. -- controlled about 71 percent of the deposits in the city as of last June, according to the FDIC. Wachovia is at the top of the heap, with a roughly 32 percent share of the market.