Royal Bank makes dollars 140m US acquisition

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The Independent Online
ROYAL Bank of Scotland's American subsidiary, Citizens Financial Group, is making its third US acquisition in just over a year by buying Quincy Savings Bank in Massachusetts for dollars 140m.

Analysts welcomed the deal as another step in an expansion strategy in which RBS has avoided the pitfalls in US retail banking that plague other British clearers.

The purchase price is equivalent to dollars 23.75 per share and represents 1.9 times Quincy's book value at 31 March. Citizens has 14 branches and is already the fifth- largest commercial bank in New England. The deal will increase its total assets to dollars 8.9bn.

Chris Ellerton, an analyst at S G Warburg, said that although the deal should dilute earnings in the short term it should be broadly neutral over 12 months because Citizens would be able to cut costs at Quincy.

Dr George Mathewson, chief executive of RBS, said: 'The acquisition is in line with our objective of selectively expanding Citizens into adjacent and complementary markets in southern New England and supports our strategy of achieving at least 10 per cent of the Royal Bank Group's future earnings from the US.'

Royal Bank said it would fund the acquisition by injecting dollars 115m into Citizens and would not need to have recourse to its shareholders.

Quincy is a state-chartered savings bank with total assets of dollars 833m. It made a profit for the quarter to 31 March of dollars 1.9m, having made a net loss of dollars 8.5m in 1993 after provisions for loan and real estate losses of dollars 23m.

Quincy's asset quality has improved after sales of certain non- performing and other assets for dollars 46m during 1993.