Citizens Financial Group is betting its new private bank will have accrued $11 billion in deposits, $10 billion in assets and made $9 billion of loans by next year.
Citizens launched the bank in October to go after high-end clients — including customers of lenders that failed last year after a bout of regional banking turmoil. Citizens has brought in about 200 bankers for the endeavor and plans to add more as it seeks to offer the kind of "white glove" service provided by
"We do a good job with our customers, but the First Republic, high-end, high-touch white glove service levels for these customers is at another level up," CEO Bruce Van Saun said in an interview. "We've been very focused on that, and I think we're making good progress. We won't be there overnight, but there's a lot of things that we can do today that are just as good as First Republic is doing."
The private bank just opened an office in Boston with further locations in Florida's Palm Beach and San Francisco planned for the coming months, Van Saun said. Overall, it's targeting six to eight premier banking offices and is also investing in technology that will allow customers to access their loan, wealth and deposit accounts with a single login, he said.
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Citizens expects the new venture to break even in the second half of this year and boost earnings per share by 5% in 2025. It's targeting $11 billion in deposits by that year from about $1.2 billion at the end of 2023.
"If we are able to hit those numbers and we have kind of the right nature of loans and deposits, we would see this as being a highly profitable business," Van Saun said.
Like many of its larger rivals, Providence, Rhode Island-based Citizens is fighting for high net worth clients to help burnish its profits as other parts of the banking industry come under pressure. Aggressive interest rate hikes last year crimped demand for loans and sent consumers in pursuit of higher-yielding assets, eroding earnings particularly at regional lenders.
Citizens, which has $222 billion of assets, reported fourth-quarter declines in net income and revenue on Wednesday. The bank's net interest income — the difference between what it earns on its assets and what it pays on its debts — dropped 12% to $1.49 billion. The firm predicts that metric to be down 6% to 9% in 2024.
The bank also said it expects its net charge-offs to continue rising after increasing sequentially for the past six quarters due in part to its exposure to commercial real estate. "We think we have those loans properly reserved for," Van Saun said. "It's just a process that we have to go through with time that's gonna be with us all through 2024 and probably a good bit into 2025."
Citizens shares are down about 23% over the past year and closed at $31.7, up 1.7%, on Wednesday.
Still, there are other bright spots. Van Saun expects capital markets to help power the bank's growth.
"That's gonna be kind of the locomotive that kind of pulls the fees up into to that growth rate for the total bank."
