WEBVTT 00:00:00.000 --> 00:00:02.500 Okay, let's unpack this. Welcome to the deep 00:00:02.500 --> 00:00:06.690 dive. Today we are cracking open the, well, the 00:00:06.690 --> 00:00:09.050 complex, winding and almost two century long 00:00:09.050 --> 00:00:11.830 story of a financial giant that really started 00:00:11.830 --> 00:00:15.330 as just a local neighborhood bank, Citizens Financial 00:00:15.330 --> 00:00:18.510 Group, a name you probably know simply as Citizens 00:00:18.510 --> 00:00:21.350 Bank. And you provided us with a truly impressive 00:00:21.350 --> 00:00:24.089 stack of sources tracking CFG's transformation. 00:00:24.550 --> 00:00:26.929 We're not just talking about, you know, a simple 00:00:26.929 --> 00:00:29.309 corporate history here. Not at all. We are looking 00:00:29.309 --> 00:00:32.929 at how global finance, regulatory crises and 00:00:32.929 --> 00:00:35.109 just incredibly aggressive mergers and acquisitions 00:00:35.109 --> 00:00:58.500 can redefine Quite a story. billions of dollars 00:00:58.500 --> 00:01:01.520 in M &A activity and some significant regulatory 00:01:01.520 --> 00:01:05.519 disputes into clear, actionable knowledge. And 00:01:05.519 --> 00:01:08.159 as we start, just remember, CFG is currently 00:01:08.159 --> 00:01:10.319 headquartered in Providence, Rhode Island, but 00:01:10.319 --> 00:01:14.379 it's now a major NYSE traded S &P 500 component. 00:01:14.780 --> 00:01:17.439 This is a bank whose, I think, defining future 00:01:17.439 --> 00:01:21.359 is its relentless ability to just redefine itself. 00:01:21.659 --> 00:01:23.439 And that redefinition, as you'll see, has been 00:01:23.439 --> 00:01:26.079 profoundly effective. I think we need to establish 00:01:26.079 --> 00:01:27.150 the scale we're talking about. talking about 00:01:27.150 --> 00:01:28.969 now because it provides the essential context 00:01:28.969 --> 00:01:30.790 for everything that came before. Okay, let's 00:01:30.790 --> 00:01:33.489 do it. As of 2023, Citizens Financial Group reported 00:01:33.489 --> 00:01:38.620 a colossal $8 .24 billion in revenue. Wow. And 00:01:38.620 --> 00:01:42.959 it held $221 billion in total assets. I mean, 00:01:42.980 --> 00:01:45.379 this massive financial engine requires a workforce 00:01:45.379 --> 00:01:48.659 of over 17 ,500 people just to keep running. 00:01:48.760 --> 00:01:50.480 That's incredible scale. And what about their 00:01:50.480 --> 00:01:52.780 physical presence? Well, it's no longer regional 00:01:52.780 --> 00:01:54.799 at all. It's national and it's expanding fast. 00:01:55.500 --> 00:01:58.980 Citizens operates 1 ,078 branches and four wealth 00:01:58.980 --> 00:02:01.599 centers. Okay. And if you look at the mat, those 00:02:01.599 --> 00:02:04.819 are spread across 14 states from New England. 00:02:05.480 --> 00:02:08.000 You know, Connecticut, Massachusetts, Rhode Island, 00:02:08.120 --> 00:02:10.759 down to the mid -Atlantic, so Delaware, Maryland, 00:02:10.979 --> 00:02:13.419 New Jersey, Pennsylvania, Virginia, D .C. Right. 00:02:13.539 --> 00:02:16.419 And then west into the Great Lakes region, Michigan, 00:02:16.740 --> 00:02:21.270 Ohio, New York, Vermont, New Hampshire. But crucially, 00:02:21.389 --> 00:02:23.889 they've recently added new growth markets like 00:02:23.889 --> 00:02:27.310 Florida and even Texas to that mix. So they're 00:02:27.310 --> 00:02:28.909 really pushing out of their traditional footprint. 00:02:29.189 --> 00:02:32.469 Exactly. And for you, the learner, looking at 00:02:32.469 --> 00:02:34.330 the U .S. financial landscape, the key metric 00:02:34.330 --> 00:02:37.729 is this. Citizens now ranks 18th on the list 00:02:37.729 --> 00:02:40.229 of largest banks in the United States as of the 00:02:40.229 --> 00:02:43.909 third quarter of 2024. 18th. So the story we're 00:02:43.909 --> 00:02:46.689 about to unpack is not one of slow, steady, organic 00:02:46.689 --> 00:02:51.520 growth. It is a textbook case of strategic, incredibly 00:02:51.520 --> 00:02:55.599 aggressive expansion and calculated corporate 00:02:55.599 --> 00:02:58.240 reinvention. And it was frequently operating 00:02:58.240 --> 00:03:00.979 under intense scrutiny and immense market pressure. 00:03:01.240 --> 00:03:03.020 Particularly during those years it was owned 00:03:03.020 --> 00:03:05.460 by the Royal Bank of Scotland. That's the part 00:03:05.460 --> 00:03:08.300 I find fascinating. That transition from a small 00:03:08.300 --> 00:03:11.340 local Rhode Island institution to the 18th largest 00:03:11.340 --> 00:03:14.340 bank in the country. That is the narrative arc 00:03:14.340 --> 00:03:16.240 of our deep dive. So let's trace it back to the 00:03:16.240 --> 00:03:19.729 very, very beginning. 1828. 1828. It was established 00:03:19.729 --> 00:03:21.849 as the High Street Bank right there in Providence. 00:03:21.990 --> 00:03:25.189 It spent decades just focused on local community 00:03:25.189 --> 00:03:27.930 needs. But the seeds of its future complexity, 00:03:28.030 --> 00:03:31.169 they were planted much, much later. In 1871, 00:03:31.349 --> 00:03:33.250 the Rhode Island legislature granted a second 00:03:33.250 --> 00:03:35.509 charter to establish the Citizen Savings Bank. 00:03:35.610 --> 00:03:38.770 Right. And that secondary entity eventually acquired 00:03:38.770 --> 00:03:41.409 its original parent, the High Street Bank, to 00:03:41.409 --> 00:03:44.069 form the Citizens Trust Company. And what's fascinating 00:03:44.069 --> 00:03:46.780 here is that this wasn't. all that unusual for 00:03:46.780 --> 00:03:49.740 the era, but it was crucial for their development. 00:03:50.659 --> 00:03:53.719 Think of it as the bank slowly buying up his 00:03:53.719 --> 00:03:57.319 own local ancestry, consolidating multiple smaller 00:03:57.319 --> 00:04:00.780 charters under one single banner. And that whole 00:04:00.780 --> 00:04:04.300 process culminated in 1954 when Citizens Financial 00:04:04.300 --> 00:04:07.039 Group was officially formed as a holding company. 00:04:07.340 --> 00:04:10.060 And that was immediately after it acquired the 00:04:10.060 --> 00:04:12.580 Greenville Trust Company. So the holding company 00:04:12.580 --> 00:04:14.860 structure, that's the key. It is essential to 00:04:14.860 --> 00:04:17.459 understand, yes, it allowed citizens to separate 00:04:17.459 --> 00:04:20.579 its banking operations from its other non -banking 00:04:20.579 --> 00:04:24.240 investments. And that provided a scalable legal 00:04:24.240 --> 00:04:27.759 and financial framework necessary to pursue future 00:04:27.759 --> 00:04:30.240 interstate expansion aggressively. Without that, 00:04:30.300 --> 00:04:32.120 they would have been stuck. Completely. They 00:04:32.120 --> 00:04:33.459 would have been restricted by the limitations 00:04:33.459 --> 00:04:36.180 of a state chartered bank. Exactly. And the final 00:04:36.180 --> 00:04:38.459 piece of the puzzle, the sort of internal transformation 00:04:38.459 --> 00:04:41.259 that really set the financial table for the seismic 00:04:41.259 --> 00:04:44.579 shift, that came in 1985. That's when Citizens 00:04:44.579 --> 00:04:47.500 changed its status from a mutual savings bank 00:04:47.500 --> 00:04:49.819 to a federal stock savings bank. That sounds 00:04:49.819 --> 00:04:52.300 like technical jargon. It does, but the change 00:04:52.300 --> 00:04:55.060 is profound, isn't it? It is. A mutual savings 00:04:55.060 --> 00:04:57.259 bank is owned and governed by its depositors. 00:04:57.680 --> 00:05:00.180 Its whole mission is safety and service, which 00:05:00.180 --> 00:05:02.980 often limits its ability to raise massive amounts 00:05:02.980 --> 00:05:05.220 of capital. Right. It's conservative by design. 00:05:05.500 --> 00:05:08.639 By design. By converting to a federal stock savings 00:05:08.639 --> 00:05:11.379 bank, citizens essentially went public. It could 00:05:11.379 --> 00:05:13.360 now be governed by shareholders who were seeking 00:05:13.360 --> 00:05:16.240 profit. And that transformation, that unlocked 00:05:16.240 --> 00:05:19.500 these vast capital reservoirs that were necessary 00:05:19.500 --> 00:05:21.959 to fund aggressive mergers and acquisitions. 00:05:22.180 --> 00:05:24.540 It was a signal that the bank was actively looking 00:05:24.540 --> 00:05:27.209 for major outside investment. And the very next 00:05:27.209 --> 00:05:30.610 year, 1986, they began expanding outside Rhode 00:05:30.610 --> 00:05:32.850 Island, starting with Massachusetts. And that 00:05:32.850 --> 00:05:34.490 outside investment arrived with a vengeance. 00:05:34.930 --> 00:05:38.050 In 1988, the pivotal moment in CFG's history 00:05:38.050 --> 00:05:41.149 occurred. The Royal Bank of Scotland group, RBS, 00:05:41.430 --> 00:05:44.230 acquired Citizens. A huge European financial 00:05:44.230 --> 00:05:46.889 power. A huge one. And they were planting a flag 00:05:46.889 --> 00:05:49.410 right in the lucrative U .S. retail market. So 00:05:49.410 --> 00:05:51.810 Citizens became a wholly owned subsidiary of 00:05:51.810 --> 00:05:55.129 RBS for 26 years, all the way until 2014. So 00:05:55.129 --> 00:05:58.250 why Citizens? Why them? That's the key question. 00:05:59.209 --> 00:06:02.149 RBS was looking for a stable, geographically 00:06:02.149 --> 00:06:04.569 strategic entry point into the massive U .S. 00:06:04.589 --> 00:06:07.889 Northeast market. Citizens, newly converted to 00:06:07.889 --> 00:06:09.990 a stock bank and perfectly positioned in New 00:06:09.990 --> 00:06:12.790 England, provided that clean, aggressive platform 00:06:12.790 --> 00:06:15.029 they needed. So they were ready to be acquired, 00:06:15.269 --> 00:06:17.850 in a way. They were primed for it. And the immediate 00:06:17.850 --> 00:06:21.209 result was a strategy of rapid acquisition, fueled 00:06:21.209 --> 00:06:24.910 by RBS's immense financial backing. Citizens 00:06:24.910 --> 00:06:27.350 just started snapping up smaller regional banks, 00:06:27.550 --> 00:06:30.310 allowing it to bypass decades of slow organic 00:06:30.310 --> 00:06:33.389 growth and become, almost overnight, the second 00:06:33.389 --> 00:06:35.509 largest bank in the entire New England region. 00:06:35.750 --> 00:06:38.029 That foreign backing was the catalyst for its 00:06:38.029 --> 00:06:40.970 current scale. There was a brief kind of interesting 00:06:40.970 --> 00:06:44.129 detour in that full RBS control, though. It suggests 00:06:44.129 --> 00:06:46.750 some complex financial maneuvering early on. 00:06:46.810 --> 00:06:49.310 In 1996, with the acquisition of First NH Bank, 00:06:49.550 --> 00:06:52.990 the Bank of Ireland suddenly gained a 23 .5 % 00:06:52.990 --> 00:06:55.430 stake in Citizens. Right. Was that required by 00:06:55.430 --> 00:06:57.709 the deal or was RBS maybe a little nervous about 00:06:57.709 --> 00:06:59.930 carrying the full weight of the expansion? It 00:06:59.930 --> 00:07:02.689 was likely a strategic necessity, probably related 00:07:02.689 --> 00:07:05.050 to the complexity of integrating First NH Bank, 00:07:05.269 --> 00:07:08.029 but also maybe a brief moment of co -investment. 00:07:08.649 --> 00:07:11.069 What's truthful, however, is that RBS almost 00:07:11.069 --> 00:07:13.509 immediately asserted its full dominance. The 00:07:13.509 --> 00:07:16.689 sources confirmed that RBS resumed 100 % ownership 00:07:16.689 --> 00:07:20.350 just two years later, by 1998. They bought out 00:07:20.350 --> 00:07:24.100 that 23 .5 % stake. And this move, it demonstrates 00:07:24.100 --> 00:07:27.360 RBS's firm commitment. They saw citizens as a 00:07:27.360 --> 00:07:29.740 non -negotiable part of their long -term global 00:07:29.740 --> 00:07:32.620 strategy. And once they reasserted that 100 % 00:07:32.620 --> 00:07:35.160 control, they immediately doubled down on consolidation. 00:07:35.500 --> 00:07:39.160 In 1999, CFG significantly increased its footprint 00:07:39.160 --> 00:07:42.019 in Massachusetts, which was a core market. They 00:07:42.019 --> 00:07:43.800 did this by acquiring both the United States 00:07:43.800 --> 00:07:46.199 Trust Company of Boston and the retail banking 00:07:46.199 --> 00:07:49.300 business of State Street Corporation. And these 00:07:49.300 --> 00:07:51.509 weren't just random acquisitions. No, they were 00:07:51.509 --> 00:07:53.629 very strategic. State Street, for example, is 00:07:53.629 --> 00:07:56.350 a massive institutional player. So shedding its 00:07:56.350 --> 00:07:58.350 retail arm allowed citizens to just pick up a 00:07:58.350 --> 00:08:00.730 ready -made customer base and a branch network 00:08:00.730 --> 00:08:03.250 in Boston, cementing their dominance in New England 00:08:03.250 --> 00:08:05.490 right before they plan their next big move. And 00:08:05.490 --> 00:08:08.209 that set the stage for the true national push, 00:08:08.310 --> 00:08:10.670 what we call the strategic leap outside of the 00:08:10.670 --> 00:08:12.550 New England comfort zone, which began in 2001. 00:08:13.050 --> 00:08:15.589 RBS decided it was time to move citizens from 00:08:15.589 --> 00:08:18.389 being a dominant regional player to a major mid 00:08:18.389 --> 00:08:20.370 -Atlantic force. And the vehicle for this was 00:08:20.370 --> 00:08:23.209 the Mellon deal. The Mellon deal. RBS purchased 00:08:23.209 --> 00:08:25.329 the retail banking division of Mellon Financial 00:08:25.329 --> 00:08:28.170 Corporation, an institution with a huge presence 00:08:28.170 --> 00:08:30.750 across Pennsylvania, New Jersey, and Delaware, 00:08:30.949 --> 00:08:34.740 for two... billion. Just think about the strategic 00:08:34.740 --> 00:08:38.240 implications of that. For $2 billion, Citizens 00:08:38.240 --> 00:08:41.340 instantly acquired hundreds of branches, thousands 00:08:41.340 --> 00:08:44.460 of customers, and deep market penetration across 00:08:44.460 --> 00:08:48.279 three new, highly populated states. That single 00:08:48.279 --> 00:08:50.980 purchase instantly made Citizens Bank the second 00:08:50.980 --> 00:08:53.139 largest bank in Pennsylvania. It put them into 00:08:53.139 --> 00:08:56.320 direct competition with giants in two huge metropolitan 00:08:56.320 --> 00:08:59.799 hubs, Philadelphia and Pittsburgh. That pace 00:08:59.799 --> 00:09:01.759 of growth buying immediate market share rather 00:09:01.759 --> 00:09:03.559 than building it, that's the hallmark of the 00:09:03.559 --> 00:09:06.659 RBS era. It is. And their aggressive marketing 00:09:06.659 --> 00:09:09.519 statement followed immediately. That regional 00:09:09.519 --> 00:09:12.139 importance became cemented not by banking services, 00:09:12.279 --> 00:09:16.769 but by a major branding exercise. In July 2003, 00:09:17.070 --> 00:09:19.590 just two years after entering the state, the 00:09:19.590 --> 00:09:22.029 bank purchased the coveted naming rights for 00:09:22.029 --> 00:09:24.409 the new home of the Philadelphia Phillies. That's 00:09:24.409 --> 00:09:26.669 right. Citizens Bank Park, which opened in April 00:09:26.669 --> 00:09:30.610 2004, that move was a clear, tangible declaration 00:09:30.610 --> 00:09:33.889 of financial power. It said, we are not just 00:09:33.889 --> 00:09:35.830 a New England interloper. We are a permanent 00:09:35.830 --> 00:09:39.000 fixture in the Philadelphia landscape. This level 00:09:39.000 --> 00:09:41.639 of investment and visibility, so quickly after 00:09:41.639 --> 00:09:44.240 entering a new state, it perfectly encapsulated 00:09:44.240 --> 00:09:47.200 the ambition that RBS had for this U .S. subsidiary. 00:09:47.259 --> 00:09:49.360 Okay, so if the Mellon deal was a giant leap, 00:09:49.500 --> 00:09:51.799 the next acquisition, the Charter One deal, that 00:09:51.799 --> 00:09:53.879 was the moment CFG achieved escape philosophy. 00:09:54.100 --> 00:09:56.379 Absolutely. The Charter One acquisition in 2004 00:09:56.379 --> 00:09:59.039 defined citizen shift from a massive regional 00:09:59.039 --> 00:10:01.870 bank to a genuine national player. In August 00:10:01.870 --> 00:10:04.330 2004, Citizens Financial acquired the Cleveland 00:10:04.330 --> 00:10:06.450 -based Charter One Financial for a staggering 00:10:06.450 --> 00:10:10.029 $10 .5 billion. $10 .5 billion. To emphasize 00:10:10.029 --> 00:10:13.940 the scale, this single transaction. was over 00:10:13.940 --> 00:10:16.720 five times the value of the Mellon deal just 00:10:16.720 --> 00:10:19.679 a few years earlier. Wow. And the geographic 00:10:19.679 --> 00:10:22.360 significance cannot be overstated. I mean, this 00:10:22.360 --> 00:10:24.960 was truly transformative. It added branches that 00:10:24.960 --> 00:10:27.639 stretched deep into the American Midwest, expanding 00:10:27.639 --> 00:10:30.259 their presence into Illinois, Ohio, Indiana, 00:10:30.720 --> 00:10:33.940 Michigan. Plus, it solidified their smaller existing 00:10:33.940 --> 00:10:36.940 footprint in upstate New York and Vermont. So 00:10:36.940 --> 00:10:39.659 after that deal, what did that make them? Post 00:10:39.659 --> 00:10:42.700 -acquisition. Citizens Financial instantly became 00:10:42.700 --> 00:10:45.659 the 12th largest bank in the United States. It 00:10:45.659 --> 00:10:48.899 was commanding over $131 billion in assets and 00:10:48.899 --> 00:10:53.500 operating 1 ,530 branches across 13 states. This 00:10:53.500 --> 00:10:56.820 was the definitive moment CFG transcended its 00:10:56.820 --> 00:10:59.490 New England identity. But with that massive expansion 00:10:59.490 --> 00:11:02.610 came, well, immediate, complex, and frankly, 00:11:02.690 --> 00:11:05.049 somewhat comical logistical problems, particularly 00:11:05.049 --> 00:11:07.690 with the branding. You've just spent $10 .5 billion 00:11:07.690 --> 00:11:10.029 and you realize you can't even use your own name 00:11:10.029 --> 00:11:12.090 in the new territory. It's the ultimate marketing 00:11:12.090 --> 00:11:14.820 nightmare. This is where global ambition just 00:11:14.820 --> 00:11:17.679 collided head on with localized banking tradition. 00:11:18.399 --> 00:11:21.000 The primary problem was that another entity, 00:11:21.200 --> 00:11:24.240 Citizens Republic Bancorp, based in Flint, Michigan, 00:11:24.580 --> 00:11:27.700 it had been operating since 1871. A very old 00:11:27.700 --> 00:11:30.159 bank. And it already operated under the Citizens 00:11:30.159 --> 00:11:33.179 Bank name across most of the acquired Midwestern 00:11:33.179 --> 00:11:36.000 territory. I mean, imagine the due diligence 00:11:36.000 --> 00:11:38.460 failure here. It's astonishing. A bank that had 00:11:38.460 --> 00:11:41.779 too many names. Because of this conflict, CFG 00:11:41.779 --> 00:11:43.879 was forced to kept the Charter One name across 00:11:43.879 --> 00:11:47.659 its major new Midwestern footprint. Ohio, Michigan, 00:11:47.940 --> 00:11:50.440 Illinois, and Indiana. They were essentially 00:11:50.440 --> 00:11:52.799 operating a massive portion of their bank under 00:11:52.799 --> 00:11:55.259 a name they had just spent $10 .5 billion to 00:11:55.259 --> 00:11:57.730 eliminate. That is just corporate irony at its 00:11:57.730 --> 00:12:00.090 finest. It really is. There was a slight exception, 00:12:00.210 --> 00:12:02.190 however, which just adds to the confusion. The 00:12:02.190 --> 00:12:04.730 New York and Vermont Charter One branches were 00:12:04.730 --> 00:12:07.590 immediately rebranded as Citizens Bank. So you 00:12:07.590 --> 00:12:09.450 had this single organization with an internal 00:12:09.450 --> 00:12:11.750 branding barrier where crossing the Ohio State 00:12:11.750 --> 00:12:14.399 line meant changing the name on the door. And 00:12:14.399 --> 00:12:16.279 the naming conflict wasn't just in the Midwest. 00:12:16.620 --> 00:12:19.279 They ran into another dispute even closer to 00:12:19.279 --> 00:12:22.100 home in Butler County, Pennsylvania. In early 00:12:22.100 --> 00:12:25.960 2005, just after the deal, a separate issue arose 00:12:25.960 --> 00:12:30.000 with a smaller but locally prominent Butler -based 00:12:30.000 --> 00:12:32.899 institution called Citizens National Bank. So 00:12:32.899 --> 00:12:35.120 another citizen. Another one. And this small 00:12:35.120 --> 00:12:38.919 bank forced CFG's hand. It led CFG to temporarily 00:12:38.919 --> 00:12:41.840 rebrand seven of its branches in Butler County 00:12:41.840 --> 00:12:44.440 to Charter 1, the very name they were trying 00:12:44.440 --> 00:12:46.659 to get rid of in the rest of Pennsylvania, just 00:12:46.659 --> 00:12:49.159 to avoid confusion and a potential lawsuit. It 00:12:49.159 --> 00:12:51.299 just highlights the immense difficulty of acquiring 00:12:51.299 --> 00:12:53.799 these old established banking charters. They 00:12:53.799 --> 00:12:55.539 often have deep historical name protections. 00:12:55.960 --> 00:12:58.279 That localized dispute was resolved, thankfully, 00:12:58.340 --> 00:13:01.279 through a compromise. By mid -2005, Citizens 00:13:01.279 --> 00:13:06.019 National Bank Okay, so they blinked. They did. 00:13:06.139 --> 00:13:09.039 And this concession then allowed the CFG branches 00:13:09.039 --> 00:13:11.559 in Butler County to revert back to the desired 00:13:11.559 --> 00:13:14.289 Citizens Bank banner. It's a great example of 00:13:14.289 --> 00:13:16.929 how large institutions sometimes have to pay 00:13:16.929 --> 00:13:20.169 a toll, either financially or through corporate 00:13:20.169 --> 00:13:22.750 identity adjustments, to resolve these hyper 00:13:22.750 --> 00:13:25.230 -local conflicts. But the big Midwest problem, 00:13:25.450 --> 00:13:28.049 Citizens Republic Bancorp, that persisted for 00:13:28.049 --> 00:13:31.129 years. It rendered a huge part of the $10 .5 00:13:31.129 --> 00:13:33.970 billion deal functionally incomplete from a branding 00:13:33.970 --> 00:13:36.450 standpoint. The final resolution didn't come 00:13:36.450 --> 00:13:39.830 until much, much later, between 2013 and 2015. 00:13:40.070 --> 00:13:42.309 And it wasn't even something CFG did directly. 00:13:42.440 --> 00:13:44.940 No. What finally cleared the way was another 00:13:44.940 --> 00:13:47.980 banking transaction entirely. In 2013, First 00:13:47.980 --> 00:13:50.340 Merit Bank acquired the competing Citizens Republic 00:13:50.340 --> 00:13:52.700 Bancorp and then subsequently rebranded all those 00:13:52.700 --> 00:13:54.720 branches. So First Merit solved their problem 00:13:54.720 --> 00:13:57.000 for them. They effectively wiped the name Citizens 00:13:57.000 --> 00:13:59.379 Bank off the map in that territory for the first 00:13:59.379 --> 00:14:03.059 time since 1871. Only then, with the name finally 00:14:03.059 --> 00:14:05.419 available and the competitive conflict resolved, 00:14:05.759 --> 00:14:08.519 could CFG announce the rebranding of their Michigan 00:14:08.519 --> 00:14:11.580 and Ohio Charter 1 branches. And that name changed. 00:14:11.659 --> 00:14:15.179 officially took place on April 27, 2015. So more 00:14:15.179 --> 00:14:17.320 than a decade after the acquisition. More than 00:14:17.320 --> 00:14:19.779 a decade. It finally ended the CharterOne identity 00:14:19.779 --> 00:14:22.139 in Cleveland, the city where that bank had originated. 00:14:22.419 --> 00:14:24.759 It's a classic case of an M &A ripple lasting 00:14:24.759 --> 00:14:27.419 10 years. And the story of CharterOne doesn't 00:14:27.419 --> 00:14:29.940 just end with the rebranding. Despite the massive 00:14:29.940 --> 00:14:32.279 cost, citizens later decided that certain parts 00:14:32.279 --> 00:14:34.360 of the network were, I guess, too inefficient 00:14:34.360 --> 00:14:36.899 or too difficult to integrate. Or just too far 00:14:36.899 --> 00:14:39.379 from their core focus markets. This led to two 00:14:39.379 --> 00:14:41.360 major strategic sales. which shows that even 00:14:41.360 --> 00:14:43.860 giant acquisitions require some refinement later 00:14:43.860 --> 00:14:46.399 on. Okay, so what were they? First, in November 00:14:46.399 --> 00:14:50.039 2008, they sold their entire network of 65 branches 00:14:50.039 --> 00:14:53.940 in Indiana to Old National Bank. This is a clear 00:14:53.940 --> 00:14:55.860 signal that they were exiting the competitive 00:14:55.860 --> 00:14:58.419 Indiana market to focus resources closer to the 00:14:58.419 --> 00:15:01.179 mid -Atlantic. That transaction closed in June 00:15:01.179 --> 00:15:04.539 2010. Okay, so Indiana was first. Second, in 00:15:04.539 --> 00:15:08.299 2014, they sold 94 branches located in metropolitan 00:15:08.299 --> 00:15:12.059 Chicago to U .S. Bancorp. Chicago is a hyper 00:15:12.059 --> 00:15:14.720 -competitive banking market, and this divestiture 00:15:14.720 --> 00:15:17.100 allowed Citizens to streamline its Midwestern 00:15:17.100 --> 00:15:19.759 operations, perhaps conceding that the cost of 00:15:19.759 --> 00:15:21.980 running a massive operation in Illinois just 00:15:21.980 --> 00:15:24.779 wasn't yielding the desired return. These sales 00:15:24.779 --> 00:15:27.539 really reinforce the idea that Citizens is constantly 00:15:27.539 --> 00:15:29.840 adjusting its network to maximize efficiency, 00:15:30.259 --> 00:15:33.100 even if it means unwinding parts of a multi -billion 00:15:33.100 --> 00:15:36.039 dollar deal. So let's move into the late 2000s. 00:15:36.059 --> 00:15:38.379 The biggest issue that affected not just citizens, 00:15:38.460 --> 00:15:41.279 but the entire global financial system was, of 00:15:41.279 --> 00:15:44.519 course, the financial crisis of 2008. But for 00:15:44.519 --> 00:15:47.320 CFG, this crisis was compounded exponentially 00:15:47.320 --> 00:15:50.179 by its foreign ownership. It created this double 00:15:50.179 --> 00:15:52.919 layer of scrutiny, political pressure and, well, 00:15:53.000 --> 00:15:55.019 financial catastrophe. To put it mildly. Right 00:15:55.019 --> 00:15:57.460 as the crisis was hitting in May 2008, our sources 00:15:57.460 --> 00:15:59.539 indicate that Citizens Financial Group failed 00:15:59.539 --> 00:16:01.559 to publicly announce that it was under investigation 00:16:01.559 --> 00:16:04.250 by the SEC, the security. and Exchange Commission 00:16:04.250 --> 00:16:06.629 for its direct involvement in the subprime mortgage 00:16:06.629 --> 00:16:09.610 crisis. And that omission is critical. It's huge. 00:16:09.850 --> 00:16:12.789 The SEC was focusing on banks' expected of involvement 00:16:12.789 --> 00:16:14.769 in the purchase and sale of subprime securities, 00:16:15.149 --> 00:16:18.049 which indicates CFG was implicated in the very 00:16:18.049 --> 00:16:20.710 activities that drove the global crash. But the 00:16:20.710 --> 00:16:22.470 real damage came through the parent company. 00:16:22.629 --> 00:16:25.730 The fallout for Royal Bank of Scotland for RBS 00:16:25.730 --> 00:16:29.830 was absolutely catastrophic. RBS posted the biggest 00:16:29.830 --> 00:16:32.049 financial loss in British corporate history. 00:16:32.190 --> 00:16:35.149 The biggest. Ever. And that resulted in RBS's 00:16:35.149 --> 00:16:37.470 effective nationalization by the U .K. government. 00:16:37.690 --> 00:16:40.389 The U .K. Treasury injected billions in taxpayer 00:16:40.389 --> 00:16:43.029 funds just to save it. So suddenly Citizens Financial 00:16:43.029 --> 00:16:46.450 Group, a major U .S. bank, was indirectly taxpayer 00:16:46.450 --> 00:16:50.409 owned, but by U .K. taxpayers. Exactly. And this 00:16:50.409 --> 00:16:53.470 dramatically altered CFG's risk profile and its 00:16:53.470 --> 00:16:56.549 political visibility. Domestically, CFG felt 00:16:56.549 --> 00:16:59.080 the pain directly. In 2008, the company itself 00:16:59.080 --> 00:17:02.759 lost $929 million and had to anticipate writing 00:17:02.759 --> 00:17:06.339 off $2 billion in bad loans. And following RBS's 00:17:06.339 --> 00:17:08.779 massive bailout, the parent company immediately 00:17:08.779 --> 00:17:11.200 announced deep cost -cutting measures at Citizens, 00:17:11.500 --> 00:17:13.900 reinforcing the fact that CFG's strategy and 00:17:13.900 --> 00:17:16.079 stability were now being dictated by the UK Treasury. 00:17:16.599 --> 00:17:19.819 And the financial distress of RBS led to external 00:17:19.819 --> 00:17:22.940 legal challenges right here in the U .S. Specifically, 00:17:23.279 --> 00:17:27.079 allegations that RBS was using its U .S. subsidiary 00:17:27.079 --> 00:17:30.839 Citizens to prop up its failing European operations. 00:17:31.140 --> 00:17:33.819 Right. It's a very serious accusation. In 2010, 00:17:34.099 --> 00:17:37.160 a Philadelphia developer filed a staggering $8 00:17:37.160 --> 00:17:41.460 billion lawsuit against Citizens Bank. The specific 00:17:41.460 --> 00:17:43.759 allegation was that the bank used what the developer 00:17:43.759 --> 00:17:46.859 called sham accusations of default to recall 00:17:46.859 --> 00:17:49.819 loans from customers. So basically saying they 00:17:49.819 --> 00:17:52.079 were manufacturing defaults to get cash back. 00:17:52.339 --> 00:17:55.079 Exactly. The lawsuit painted a picture of a desperate 00:17:55.079 --> 00:17:57.660 bank under foreign political pressure, potentially 00:17:57.660 --> 00:18:00.119 engaging in predatory practices simply to shore 00:18:00.119 --> 00:18:03.039 up capital. The sources confirm this huge case 00:18:03.039 --> 00:18:05.339 was ultimately settled out of court. And the 00:18:05.339 --> 00:18:07.339 combination of the nationalization and all this 00:18:07.339 --> 00:18:10.680 legal turmoil, it fueled enormous public and 00:18:10.680 --> 00:18:12.640 political pressure back in the United Kingdom. 00:18:12.779 --> 00:18:16.140 The narrative was simple. UK taxpayers were footing 00:18:16.140 --> 00:18:19.180 the bill to save RBS and public opinion demanded 00:18:19.180 --> 00:18:22.259 the RBS sell off profitable foreign assets like 00:18:22.259 --> 00:18:25.519 Citizens Bank to repay the Treasury. Citizens, 00:18:25.740 --> 00:18:28.400 ironically, had grown so large under RBS control 00:18:28.400 --> 00:18:30.920 that it became a political lightning rod in a 00:18:30.920 --> 00:18:33.019 foreign country. And that created a genuine feeding 00:18:33.019 --> 00:18:35.420 frenzy among North American banks. Oh, absolutely. 00:18:35.920 --> 00:18:40.170 Citizens was now seen as a forced seller. a massive 00:18:40.170 --> 00:18:43.049 established U .S. retail network that was about 00:18:43.049 --> 00:18:46.089 to hit the auction block. Substantial interest 00:18:46.089 --> 00:18:48.210 was rumored from major Canadian players like 00:18:48.210 --> 00:18:50.869 Toronto Dominion Bank, TD. Whose network would 00:18:50.869 --> 00:18:52.769 have fit perfectly. Perfectly. And the Bank of 00:18:52.769 --> 00:18:55.650 Montreal? Major U .S. institutions like JPMorgan 00:18:55.650 --> 00:18:58.390 Chase, Wells Fargo, and regional powerhouses 00:18:58.390 --> 00:19:00.730 like PNC Financial Services were all mentioned 00:19:00.730 --> 00:19:04.049 as keenly interested potential buyers. Citizens 00:19:04.049 --> 00:19:06.690 was a prize. Valued not just for its assets, 00:19:06.750 --> 00:19:09.329 but for its extensive deposit base and operational 00:19:09.329 --> 00:19:11.789 infrastructure across the entire Northeast. So 00:19:11.789 --> 00:19:14.170 the decision finally came down not to an outright 00:19:14.170 --> 00:19:16.309 sale to a competitor, which would have consolidated 00:19:16.309 --> 00:19:19.089 the market even more, but to an initial public 00:19:19.089 --> 00:19:22.410 offering, the path to independence. Survival 00:19:22.410 --> 00:19:25.700 as its own entity, yes. In February 2013, RBS 00:19:25.700 --> 00:19:28.460 confirmed its plan for at least a partial spinoff 00:19:28.460 --> 00:19:31.920 of Citizens via an IPO. However, the UK political 00:19:31.920 --> 00:19:34.900 pressure to fully divest just accelerated the 00:19:34.900 --> 00:19:38.539 timeline dramatically. By November 2013, RBS 00:19:38.539 --> 00:19:40.380 announced that it would sell all of Citizens 00:19:40.380 --> 00:19:43.539 Financial Group. No half measures. None. This 00:19:43.539 --> 00:19:45.900 marked the official irreversible beginning of 00:19:45.900 --> 00:19:49.059 the end of the RBS era, all necessitated by U 00:19:49.059 --> 00:19:51.519 .K. domestic politics and taxpayer demands. And 00:19:51.519 --> 00:19:53.500 the transition back to public life moved quickly. 00:19:53.599 --> 00:19:55.660 The bank began trading on the New York Stock 00:19:55.660 --> 00:19:58.819 Exchange under the ticker symbol CFG on September 00:19:58.819 --> 00:20:02.599 24, 2014. And the IPO was a massive success. 00:20:02.839 --> 00:20:06.069 It raised $3 billion. A critical moment. It was. 00:20:06.410 --> 00:20:09.130 This is where CFG re -entered the public eye 00:20:09.130 --> 00:20:11.630 as an independent entity, no longer tethered 00:20:11.630 --> 00:20:13.970 to a nationalized European giant. And RBS sold 00:20:13.970 --> 00:20:16.130 off its stake pretty quickly after that. Systematically 00:20:16.130 --> 00:20:17.950 over the next year. Their shareholding dropped 00:20:17.950 --> 00:20:22.190 to 45 .6 % by April 2015, and they fully completed 00:20:22.190 --> 00:20:24.210 the separation by selling the final stake in 00:20:24.210 --> 00:20:26.630 October 2015. And yet they still use the logo. 00:20:26.930 --> 00:20:28.849 That's what I find fascinating. The branding 00:20:28.849 --> 00:20:32.500 legacy. Despite this total separation in independence, 00:20:32.920 --> 00:20:36.259 Citizens still uses the former RBS daisy wheel 00:20:36.259 --> 00:20:39.539 logo. It's a silent, subtle nod to the massive 00:20:39.539 --> 00:20:42.059 expansion era, the foreign capital, that allowed 00:20:42.059 --> 00:20:44.660 it to reach its current scale. And this return 00:20:44.660 --> 00:20:47.339 to independence was immediately recognized as 00:20:47.339 --> 00:20:50.880 a major milestone. In June 2016, Citizens Financial 00:20:50.880 --> 00:20:53.720 Group officially joined the Fortune 500 for the 00:20:53.720 --> 00:20:56.329 first time. Now that they were independent and 00:20:56.329 --> 00:20:58.670 a Fortune 500 company, they became subject to 00:20:58.670 --> 00:21:00.589 the full force of U .S. regulatory oversight. 00:21:00.809 --> 00:21:03.809 And that led to some some tough revelations about 00:21:03.809 --> 00:21:05.509 internal practices that had been running during 00:21:05.509 --> 00:21:07.210 those years of foreign ownership and crisis. 00:21:07.670 --> 00:21:09.690 This is perhaps one of the most troubling stories 00:21:09.690 --> 00:21:11.230 we pulled from the source material because it 00:21:11.230 --> 00:21:13.089 really strikes at the fundamental integrity of 00:21:13.089 --> 00:21:16.259 banking. In August 2015, just months after the 00:21:16.259 --> 00:21:18.460 full divestiture, the Consumer Financial Protection 00:21:18.460 --> 00:21:21.680 Bureau, the CFPB, along with the FDIC and the 00:21:21.680 --> 00:21:23.799 controller of the currency, they levied nearly 00:21:23.799 --> 00:21:26.900 $35 million in penalties against Citizens Bank. 00:21:27.119 --> 00:21:30.380 And the finding was chilling. The regulators 00:21:30.380 --> 00:21:32.819 determined that citizens had engaged in systemic 00:21:32.819 --> 00:21:36.980 deceptive practices between 2008 and 2013. And 00:21:36.980 --> 00:21:39.299 the specific mechanism of this deception, it 00:21:39.299 --> 00:21:41.839 was just shocking in its simplicity. It was. 00:21:42.509 --> 00:21:44.769 the bank failed to credit customers' accounts 00:21:44.769 --> 00:21:47.329 with the full amount of their deposits. Can you 00:21:47.329 --> 00:21:49.390 explain how that worked exactly? Let me be very 00:21:49.390 --> 00:21:52.289 specific. If a customer was depositing cash, 00:21:52.589 --> 00:21:55.230 and the actual amount of cash didn't precisely 00:21:55.230 --> 00:21:57.730 match the number written on the deposit slip, 00:21:57.869 --> 00:22:01.109 say, the slip said $300, but the teller counted 00:22:01.109 --> 00:22:04.970 $305, the bank failed to correct the discrepancy. 00:22:05.029 --> 00:22:07.470 We just kept it. Instead of crediting the customer 00:22:07.470 --> 00:22:09.470 the full amount, they pocketed the difference. 00:22:10.290 --> 00:22:12.490 Regulators calculated that this simple systemic 00:22:12.490 --> 00:22:15.130 failure to correct errors in the customer's favor 00:22:15.130 --> 00:22:18.210 shorted consumers millions of dollars over that 00:22:18.210 --> 00:22:20.589 five -year period. It's a profound failure of 00:22:20.589 --> 00:22:22.970 basic institutional trust, and it happened during 00:22:22.970 --> 00:22:25.430 the crisis years. The repercussions were significant 00:22:25.430 --> 00:22:28.269 and, I imagine, very publicly damaging. Of course. 00:22:28.509 --> 00:22:31.470 CFG was required to reimburse customers for all 00:22:31.470 --> 00:22:34.170 lost funds, which had to be a complex and time 00:22:34.170 --> 00:22:36.809 -consuming process, and was required to pay roughly 00:22:36.809 --> 00:22:40.009 $20 million in fines to the three separate agencies. 00:22:40.430 --> 00:22:42.150 And the New York Times had a strong take on it. 00:22:42.349 --> 00:22:44.690 They did. The New York Times editorial board, 00:22:44.829 --> 00:22:47.390 in its critical response, called the misconduct 00:22:47.390 --> 00:22:51.029 appalling precisely because it is so basic. Their 00:22:51.029 --> 00:22:54.170 argument was powerful. If a fundamental banking 00:22:54.170 --> 00:22:56.509 function like crediting a cash deposit could 00:22:56.509 --> 00:22:59.609 be systematically abused for profit, it demonstrated 00:22:59.609 --> 00:23:02.269 the absolute necessity of post -crisis regulators 00:23:02.269 --> 00:23:05.750 like the CFPB. For the newly independent CFG, 00:23:05.849 --> 00:23:08.089 this was a massive reputational burden to carry 00:23:08.089 --> 00:23:10.529 right out of the gate. Then around the same period, 00:23:10.690 --> 00:23:12.789 Citizens Bank found itself inadvertently pulled 00:23:12.789 --> 00:23:14.930 into one of the biggest, most high -profile political 00:23:14.930 --> 00:23:17.410 investigations of the decade. The probe into 00:23:17.410 --> 00:23:20.190 alleged Russian interference in the 2016 elections. 00:23:20.710 --> 00:23:24.630 Yes, exactly. In May 2017, reports surfaced that 00:23:24.630 --> 00:23:27.509 the U .S. Department of Justice, the DOJ, had 00:23:27.509 --> 00:23:29.730 requested extensive transaction records for Paul 00:23:29.730 --> 00:23:32.710 Manafort, the former Trump 2016 campaign manager, 00:23:32.869 --> 00:23:35.289 from numerous banks. And Citizens was on that 00:23:35.289 --> 00:23:37.869 list. This request was directly tied to the investigation 00:23:37.869 --> 00:23:40.170 being conducted by special counsel Robert Mueller. 00:23:40.329 --> 00:23:42.829 And the specific loan detail that brought citizens 00:23:42.829 --> 00:23:45.150 into the headlines was that Manafort had reportedly 00:23:45.150 --> 00:23:49.789 secured a $2 .7 million loan from citizens in 00:23:49.789 --> 00:23:53.730 2016. Now, lending money to a campaign manager 00:23:53.730 --> 00:23:57.049 is not inherently illegal. No. But the context 00:23:57.049 --> 00:23:59.410 of the investigation made this highly, highly 00:23:59.410 --> 00:24:01.509 sensitive. And the subsequent market reaction 00:24:01.509 --> 00:24:04.400 reveals the depth of that sensitivity. In February 00:24:04.400 --> 00:24:07.160 2018, when special counsel Robert Mueller's indictment 00:24:07.160 --> 00:24:09.279 of Manafort was released, Citizen's stock price 00:24:09.279 --> 00:24:11.920 dropped a significant 4 .1%. That's a big drop. 00:24:12.039 --> 00:24:14.960 It is. And it suggests that the market perceived 00:24:14.960 --> 00:24:17.200 that Citizens was the institution referenced 00:24:17.200 --> 00:24:20.180 as lender B in the indictment, which detailed 00:24:20.180 --> 00:24:24.160 a $3 .4 million loan to Manafort. The concern 00:24:24.160 --> 00:24:26.640 for investors wasn't the size of the loan. It 00:24:26.640 --> 00:24:29.319 was the potential exposure to legal and reputational 00:24:29.319 --> 00:24:31.599 risks associated with the high -profile nature 00:24:31.599 --> 00:24:34.960 and the questionable collateral of the transaction 00:24:34.960 --> 00:24:38.390 cited in the indictment. Being a footnote in 00:24:38.390 --> 00:24:40.529 a massive federal political investigation is 00:24:40.529 --> 00:24:43.230 never a good look for investor confidence. So 00:24:43.230 --> 00:24:46.029 if the earlier decades were about survival, consolidation 00:24:46.029 --> 00:24:48.730 under foreign pressure and regulatory reckoning, 00:24:48.869 --> 00:24:51.730 the period from 2018 onward has been defined 00:24:51.730 --> 00:24:55.009 by, well, proactive, aggressive expansion designed 00:24:55.009 --> 00:24:57.769 to truly define citizens' modern national footprint. 00:24:58.069 --> 00:25:00.190 They're using their independence to shape their 00:25:00.190 --> 00:25:02.740 own destiny now. And we can trace this through 00:25:02.740 --> 00:25:05.420 three key modern acquisitions, each serving a 00:25:05.420 --> 00:25:09.160 distinct strategic purpose. First, in 2018, Citizens 00:25:09.160 --> 00:25:10.960 completed the acquisition of Franklin American 00:25:10.960 --> 00:25:14.759 Mortgage in a deal valued at $511 million. And 00:25:14.759 --> 00:25:16.680 this wasn't just about mortgages. Not at all. 00:25:16.779 --> 00:25:19.619 It was strategically crucial because it expanded 00:25:19.619 --> 00:25:22.200 Citizens' geographical presence into the newer, 00:25:22.319 --> 00:25:24.319 faster -growing Sunbelt markets of Tennessee 00:25:24.319 --> 00:25:27.220 and Texas. It was a clear move to diversify away 00:25:27.220 --> 00:25:30.029 from the slow -growth Northeast. Then came two 00:25:30.029 --> 00:25:32.970 massive East Coast deals that were clearly designed 00:25:32.970 --> 00:25:35.710 to solidify coastal dominance and market share 00:25:35.710 --> 00:25:40.230 in high -value, lucrative markets. In 2021, Citizens 00:25:40.230 --> 00:25:43.029 entered into an agreement to purchase HSBC Bank 00:25:43.029 --> 00:25:45.990 USA's entire retail operations on the East Coast. 00:25:46.250 --> 00:25:48.589 This was an incredible opportunity, acquiring 00:25:48.589 --> 00:25:52.529 about $9 billion in deposits and $2 .2 billion 00:25:52.529 --> 00:25:55.470 in loans from a major international player that 00:25:55.470 --> 00:25:57.980 was looking to retreat. A huge pickup. The acquisition 00:25:57.980 --> 00:26:01.279 completed in April 2022, and citizens took over 00:26:01.279 --> 00:26:04.440 80 HSBC branches spread across major East Coast 00:26:04.440 --> 00:26:06.900 markets. New York City, New Jersey, Pennsylvania, 00:26:07.200 --> 00:26:09.799 D .C., Maryland, Virginia, and notably Florida. 00:26:10.119 --> 00:26:13.240 This move instantly propelled citizens into direct 00:26:13.240 --> 00:26:15.339 competition with the largest national players 00:26:15.339 --> 00:26:17.460 in the Mid -Atlantic and Southeast Coastal region 00:26:17.460 --> 00:26:20.359 using HSBC's established high -quality network. 00:26:20.700 --> 00:26:23.599 And they did this simultaneously with another 00:26:23.599 --> 00:26:27.539 major deal. In July 2021, Citizens announced 00:26:27.539 --> 00:26:30.400 plans for its next big acquisition, New Jersey 00:26:30.400 --> 00:26:33.720 -based investors Bancorp, for $3 .5 billion. 00:26:34.200 --> 00:26:37.720 And this was about density. Pure regional density. 00:26:37.880 --> 00:26:40.380 It was a significant push into the lucrative, 00:26:40.539 --> 00:26:42.960 deposit -rich New Jersey and New York metropolitan 00:26:42.960 --> 00:26:46.519 areas, taking over more than 150 branches that 00:26:46.519 --> 00:26:48.819 were highly concentrated in high -value demographics. 00:26:49.299 --> 00:26:51.720 And that rebranding happened pretty fast? Very. 00:26:51.799 --> 00:26:55.549 By February 2023, All investors' locations had 00:26:55.549 --> 00:26:58.549 been rebranded as Citizens Bank, further standardizing 00:26:58.549 --> 00:27:00.690 their network and eliminating another legacy 00:27:00.690 --> 00:27:03.410 name. When you combine the HSBC acquisition, 00:27:03.750 --> 00:27:05.690 which gave them the branches, and the investors' 00:27:05.869 --> 00:27:08.049 Bancorp acquisition, which gave them the market 00:27:08.049 --> 00:27:10.849 density, you see a clear, calculated strategy 00:27:10.849 --> 00:27:13.990 to become a dominant force along the entire Atlantic 00:27:13.990 --> 00:27:16.470 seaboard. Beyond these massive mergers, Citizens 00:27:16.470 --> 00:27:19.170 has also adopted a pretty unique and highly flexible 00:27:19.170 --> 00:27:22.049 branch strategy. It focuses heavily on customer 00:27:22.049 --> 00:27:24.150 convenience, which often sets them apart from 00:27:24.150 --> 00:27:26.250 their more traditional competitors who are frequently 00:27:26.250 --> 00:27:29.349 focused on closing branches entirely. The core 00:27:29.349 --> 00:27:31.670 of this strategy involves operating in -store 00:27:31.670 --> 00:27:34.849 footprints inside major supermarket chains. The 00:27:34.849 --> 00:27:36.609 greatest number of these are in the Pittsburgh 00:27:36.609 --> 00:27:39.670 -based Giant Eagle stores, a legacy acquired 00:27:39.670 --> 00:27:41.910 through that initial Mellon deal back in 2001. 00:27:42.289 --> 00:27:45.250 They also operate branches inside many Stop and 00:27:45.250 --> 00:27:47.410 Shop and Shaw stores throughout New England. 00:27:47.650 --> 00:27:50.490 And this supermarket strategy offers a distinct 00:27:50.490 --> 00:27:54.150 competitive advantage. you could call the Sunday 00:27:54.150 --> 00:27:56.609 advantage. The Sunday advantage. I like that. 00:27:56.769 --> 00:27:59.769 Historically, most major USA banks were closed 00:27:59.769 --> 00:28:02.730 on Sundays and often on Saturdays for full service 00:28:02.730 --> 00:28:05.970 transactions. Citizens leveraged these in -store 00:28:05.970 --> 00:28:08.250 locations to offer full service banking from 00:28:08.250 --> 00:28:11.569 10 a .m. to 3 p .m. on Sundays. This convenience 00:28:11.569 --> 00:28:14.150 factor, it dramatically lowered the barrier to 00:28:14.150 --> 00:28:16.730 entry for customers and integrated banking into 00:28:16.730 --> 00:28:18.630 the customer's existing weekly shopping routine. 00:28:19.019 --> 00:28:21.200 Plus, you get high foot traffic and lower real 00:28:21.200 --> 00:28:23.799 estate costs than a standalone branch. But even 00:28:23.799 --> 00:28:26.000 this seemingly successful strategy is dynamic. 00:28:26.180 --> 00:28:28.519 It's subject to market negotiation, right? Yeah, 00:28:28.579 --> 00:28:31.480 it is. For instance, in September 2010, Giant 00:28:31.480 --> 00:28:33.619 Eagle announced a new agreement with Huntington 00:28:33.619 --> 00:28:36.059 Bank, stating that Huntington would begin opening 00:28:36.059 --> 00:28:38.420 branches in several stores in Ohio and West Virginia, 00:28:38.640 --> 00:28:41.480 replacing existing bank branches, including Citizens, 00:28:41.779 --> 00:28:44.839 as those agreements expired. It shows that maintaining 00:28:44.839 --> 00:28:47.759 these unique high traffic relationships is a 00:28:47.759 --> 00:28:50.470 constant. negotiation in the retail world. And 00:28:50.470 --> 00:28:52.710 finally, we have to mention one of the more novel 00:28:52.710 --> 00:28:55.130 experiments that really illustrates their dedication 00:28:55.130 --> 00:28:58.049 to extreme accessibility. The Dunkin' Donuts 00:28:58.049 --> 00:29:00.470 branch. The Dunkin' Donuts branch. In October 00:29:00.470 --> 00:29:03.950 2009, Citizens Bank opened a full service branch 00:29:03.950 --> 00:29:06.589 inside a Dunkin' Donuts in Bellingham, Massachusetts. 00:29:07.319 --> 00:29:09.819 This wasn't just an ATM. No, it was a real branch. 00:29:10.059 --> 00:29:13.220 It was a functioning teller window, a full -service 00:29:13.220 --> 00:29:16.380 ATM, and they often ran promotions directly linking 00:29:16.380 --> 00:29:19.200 bank services to the purchase of coffee and donuts. 00:29:19.740 --> 00:29:22.759 It is an approach that truly prioritizes integrating 00:29:22.759 --> 00:29:25.460 banking into the most mundane and constant of 00:29:25.460 --> 00:29:28.420 the customer's daily retail routines. It pushes 00:29:28.420 --> 00:29:30.339 the boundaries of what a physical bank branch 00:29:30.339 --> 00:29:33.759 even needs to be. So if we pull back and synthesize 00:29:33.759 --> 00:29:36.039 what we've covered, two centuries of history, 00:29:36.220 --> 00:29:39.240 relentless name changes, 26 years of foreign 00:29:39.240 --> 00:29:42.420 ownership, major regulatory conflicts, and continuous 00:29:42.420 --> 00:29:46.000 strategic acquisitions, it all culminates in 00:29:46.000 --> 00:29:49.299 the 18th largest bank in the U .S. It's an incredible 00:29:49.299 --> 00:29:52.119 journey. When we reflect on that journey, the 00:29:52.119 --> 00:29:54.099 importance of the Royal Bank of Scotland era 00:29:54.099 --> 00:29:57.779 cannot be overstated. Citizens' modern identity 00:29:57.779 --> 00:30:00.619 was absolutely forged during those 26 years of 00:30:00.619 --> 00:30:03.759 foreign ownership. RBS's financial backing allowed 00:30:03.759 --> 00:30:06.460 for the rapid acquisition -fueled growth, the 00:30:06.460 --> 00:30:08.700 Mellon deal, the massive Charter One deal, and 00:30:08.700 --> 00:30:10.500 dozens of others that expanded the footprint 00:30:10.500 --> 00:30:12.960 across 14 states. Right. It let them achieve 00:30:12.960 --> 00:30:15.000 a national scale that the original Rhode Island 00:30:15.000 --> 00:30:17.039 Mutual Savings Bank could never have reached 00:30:17.039 --> 00:30:19.299 on its own. It was foreign capital that provided 00:30:19.299 --> 00:30:21.259 the rocket fuel. But that growth came with a 00:30:21.259 --> 00:30:24.250 cost. A huge one. The transition to being the 00:30:24.250 --> 00:30:26.990 18th largest bank also introduced, and sometimes 00:30:26.990 --> 00:30:30.049 created, massive regulatory and reputational 00:30:30.049 --> 00:30:32.910 challenges. Those are the hidden costs of that 00:30:32.910 --> 00:30:35.829 scale. This is clearly evidenced by the previously 00:30:35.829 --> 00:30:39.190 undisclosed SEC investigation into subprime securities, 00:30:39.650 --> 00:30:42.630 the devastating $35 million fine from federal 00:30:42.630 --> 00:30:45.170 regulators for systematically pocketing cash 00:30:45.170 --> 00:30:48.210 deposit discrepancies, a profound violation of 00:30:48.210 --> 00:30:50.730 trust, and the high -profile entanglement in 00:30:50.730 --> 00:30:53.430 the Paul Manafort investigation. Scaling up brings 00:30:53.430 --> 00:30:56.009 scrutiny from every corner. And the most important 00:30:56.009 --> 00:30:58.250 current characteristic is that constant state 00:30:58.250 --> 00:31:01.190 of strategic flux. The modern CFG is defined 00:31:01.190 --> 00:31:04.789 by aggressive, opportunistic expansion like the 00:31:04.789 --> 00:31:07.569 massive recent acquisitions of HSBC's retail 00:31:07.569 --> 00:31:10.670 operations and investors Bancorp to dominate 00:31:10.670 --> 00:31:13.130 the East Coast. But that's coupled with equally 00:31:13.130 --> 00:31:15.609 strategic calculated branch management like the 00:31:15.609 --> 00:31:17.809 divestiture of the inefficient Chicago branches 00:31:17.809 --> 00:31:20.309 and the highly customized supermarket locations. 00:31:20.549 --> 00:31:23.089 Exactly. They're constantly adjusting their fiscal 00:31:23.089 --> 00:31:25.569 and financial network. to maximize the efficiency 00:31:25.569 --> 00:31:27.890 and network effect of their assets, always looking 00:31:27.890 --> 00:31:30.170 for the next growth opportunity. So what does 00:31:30.170 --> 00:31:32.410 this all mean for you, the learner, watching 00:31:32.410 --> 00:31:35.609 the banking landscape? Citizens Financial Group, 00:31:35.730 --> 00:31:39.069 Inc. is a study in how global pressures and localized 00:31:39.069 --> 00:31:41.569 banking traditions collide, often with dramatic 00:31:41.569 --> 00:31:44.829 results. We saw the nationalization of RBS in 00:31:44.829 --> 00:31:47.690 the UK force the entire divestiture of this massive 00:31:47.690 --> 00:31:50.210 U .S. bank. And conversely, we saw the complex 00:31:50.210 --> 00:31:52.869 local history of names like Citizens Republic 00:31:52.869 --> 00:31:55.730 Bancorp and Citizens National Bank Force, a major 00:31:55.730 --> 00:31:58.049 ten and a half billion dollar acquisition to 00:31:58.049 --> 00:31:59.990 operate under a temporary name like Charter One 00:31:59.990 --> 00:32:02.609 for years. It's a battle between the local charter 00:32:02.609 --> 00:32:05.150 and the global playbook. A fascinating dynamic. 00:32:05.630 --> 00:32:07.829 So the provocative question we leave you with 00:32:07.829 --> 00:32:11.269 is this. Given the sheer scale of CFG's recent 00:32:11.269 --> 00:32:13.829 acquisitions pushing them into new sprawling 00:32:13.829 --> 00:32:16.250 markets like Florida and Texas, their determined 00:32:16.250 --> 00:32:18.930 march shows no sign of slowing down. The question 00:32:18.930 --> 00:32:20.950 for the future is not simply how big Citizens 00:32:20.950 --> 00:32:23.789 Bank will get, but rather which historical corporate 00:32:23.789 --> 00:32:26.769 name, identity, or competitor bank footprint 00:32:26.769 --> 00:32:28.710 in one of those new markets will it eventually 00:32:28.710 --> 00:32:31.549 have to confront, negotiate with, or simply buy 00:32:31.549 --> 00:32:33.849 out next as its operational footprint continues 00:32:33.849 --> 00:32:35.950 its aggressive and nearly unstoppable expansion 00:32:35.950 --> 00:32:37.809 across the country. That's what we'll all be 00:32:37.809 --> 00:32:38.049 watching.