Citigroup to Buy European American Bank in Bid to Increase N.Y. Market Share
February 13, 2001|From Times Wire Services
NEW YORK — Citigroup Inc., the largest U.S. financial services company, said
Monday it agreed to buy European American Bank from Dutch banking company ABN
Amro Holding for $1.6 billion in cash to gain more branches in the New York
The purchase will give Citigroup a boost in its rivalry with J.P. Morgan Chase &
Co., which has the largest market share in New York City. Citigroup said it has
96 branches in the area.
Based in Uniondale, Long Island, EAB has $15.4 billion in assets, $11.5 billion
in deposits and 97 branches in New York City and Long Island.
Citibank, the banking arm of New York-based Citigroup, has assets of more than
$792 billion. The purchase of EAB, which also includes the assumption of $350
million in EAB preferred stock, will greatly expand Citibank's reach into
Citigroup said the acquisition will add "a few cents" to its earnings per share
in the first year after completion, which is expected midyear.
The company said it plans to close some branches after completing the deal.
Marge Magner, head of Citigroup's domestic retail operations, said branch
employees won't lose their jobs, although job cuts are expected in other areas.
The acquisition, which is subject to regulatory approval, is the latest in a
series for Citigroup.
Early last year, the company paid $2.2 billion to acquire Schroder's investment
banking division in London, which was combined with the European operations of
its Salomon Smith Barney brokerage unit.
Then in December, Citigroup completed the $31.1-billion purchase of Associates
First Capital Corp. Purchase of the sub-prime lender was approved by bank
regulators after Citigroup pledged to strengthen its consumer safeguards,
especially for home equity loans.
ABN Amro formally began soliciting bids for the regional bank unit at the end of
January. FleetBoston Financial Corp., the nation's seventh-largest bank, and
North Fork Bancorp Inc. were both seen as front-runners in the bidding process.
ABN Amro will use the proceeds to pay for part of its $2.75-billion purchase of
Chicago-based Michigan National Corp., Bloomberg News said. The largest Dutch
bank has been sharpening its retail-banking strategy to focus on markets where
it has a substantial market share.
In the U.S. it's expanding in the Midwest, where it also owns Standard Federal
Bank of Troy, Mich., and Chicago-based LaSalle Bank. EAB was too small to
compete with Goliaths such as Chase Manhattan and Citibank.
The Amsterdam-based bank joins other European companies backtracking from the
New York market. London-based National Westminster Bank sold its network of 900
branches in New York and New Jersey in 1995 to what is now FleetBoston Financial
Bank of New York Co. bought Barclays' 62 branches in the New York metropolitan
area eight years ago for about $150 million.