- Citizens Financial has made a slew of acquisitions in recent years, and there may be more to come.
- The purchases are helping its corporate and investment-banking arms better compete on Wall Street.
- This year, Citizens will focus on integrating recent purchases and welcoming dozens of new bankers.
Citizens Bank has made a slew of savvy acquisitions in recent years as it races to grow its commercial and investment banking units.
The deals have been paying off — as the bank inches its way up the league tables — and now it’s set on integrating these acquisitions into the broader Citizens brand and hire new bankers in the process.
Headquartered in Providence, Rhode Island, Citizens’ recent acquisitions — three in the last few months and six total since 2017 — come as it doubles down on booms across capital markets and corporate finance. It bought boutique investment firms JMP Group and DH Capital in September and December, respectively.
These moves were made to help Citizens win more lending and advisory business with technology, healthcare, and with financial companies, Don McCree, a vice-chair and head of commercial banking at Citizens, told Insider.
Following the buying spree, McCree’s now focused on coupling Citizens’ latest purchases with its existing platform to create a somewhat one-stop-shop to better compete with bigger investment banks on Wall Street, and also combine its corporate finance, private-equity sponsor finance, and M&A teams to bring a larger product suite to clients.
“The biggest opportunity is going to be integrating these companies we’re buying. We’ve got additions which will move us into industry areas that we haven’t been in before,” said McCree, adding that the bank could yet make more small purchases this year to grow its capabilities in areas like infrastructure-related banking.
These acquisitions, which have brought in “dozens” of corporate-finance bankers, have also expanded Citizens’ reach, with offices in Los Angeles, San Francisco, New York, and Texas.
To complement that growth, the firm expects to hire “10 to 20” senior bankers and about 40 to 50 juniors in its investment-banking and corporate-banking programs, McCree said.
While Citizens lacks the multi-billion-dollar transactions that Goldman Sachs or Morgan Stanley might win, the regional bank keeps its best bankers motivated through rapid promotions and the promise of building a banking product that is still in its infancy. The bank wouldn’t disclose what it pays investment bankers, but said it was in line with market rates for base salaries.
“If we see someone that is very good, we will move them up the ranks very quickly,” McCree said. “When we put someone through the interview rounds, they get excited about being able to come in and take an entrepreneurial bend. Here you’re part of a small institution and you can make a difference.”
It’s a path McCree knows well: he joined Citizens in 2015 after more than 30 years at JPMorgan, where he held multiple positions, including leading its corporate banking and European investment-banking franchises.
“What I saw at the time was a product that was really narrow,” he said of Citizens when he joined. “The theme has been to bring on very strong industry-oriented capabilities where we felt we could compete head-to-head with virtually anybody in the market.”
To be sure, it’s a tall order, especially when the US’ big money center, and investment banks rule the roost, but Citizens has made progress.
In US syndicated loans, it ranked 21st last year, and 22nd in 2020 and 2019, according to Refinitiv data. It wasn’t a regular feature in the top 25 before that. And in US leveraged loans, the bank has made greater strides, ranking 17th, 16th, and 15th in the last three years, respectively, the data showed.
Six deals in 5 years
Citizens improved performance in leveraged loans, meanwhile, comes as the bank eyes more business with private-equity firms.
Buyout firms regularly turn to the leveraged-loan market to finance acquisitions.
And for McCree, it’s a chance to not only advise a private-equity firm on a purchase, but provide the financing, and syndicate it to institutional investors, a method that brings in fees for various parts of the bank and favors an integrated banking strategy.
Like last November, Orangewood Partners acquired Pacific Bells, a Taco Bell franchisee, from another private-equity firm Partners Group.
Citizens’ Trinity Capital, which it bought in 2020, advised Orangewood on the sale, while Citizens’ own bankers led the financing and syndicated the debt to institutional investors.
“It really is a one-plus-one equals three component. So integration is a big part of where we’re focused in 2022,” he said.
Here are five acquisitions Citizens has made in its corporate finance and capital markets division to scale up business and compete with Wall Street behemoths.
Deal details: Acquisition announced in December.
What it does: DH Capital is an investment-banking firm that specializes companies in the internet infrastructure, software and next-generation IT services, and communication sectors.
Deal details: Acquisition completed in November.
What it does: JMP is a capital-markets firm that focuses in the healthcare, technology, financial services, and real-estate sectors. The firm specializes in equity research, strategic advisory, and sales and trading.
Deal details: Acquisition completed in September.
What it does: Williamette provides corporate and legal clients with financial advising services, namely business valuations. The company also provides services like IP valuation, forensic accounting investigations, and transaction fairness opinions and solvency options.
Deal details: Acquisition completed in March 2020.
What it does: Trinity is a Los Angeles, California-based financial advisory firm that caters to middle-market business and provides services such as debt restructuring, leveraged and management buyouts, and private placements of debt and equity.
Deal details: Acquisitions completed in March 2019.
What it does: Bowstring is an Atlanta, Georgia-based M&A advisory firm that works with industrial and commercial clients.
Deal details: Acquisition announced in May 2017.
What it does: Western Reserve is a Cleveland, Ohio-based M&A advisory firm that focuses on middle-market clients.