Citizens Financial (NYSE:CFG) Group has initiated a nationwide private-banking unit, spearheaded by Susan DeTray, previously an executive at First Republic Bank (OTC:FRCB). The new unit has already accrued about $500 million in deposits and investments, with the help of 150 newly hired personnel, including 50 senior bankers from First Republic Bank. Nine private-banking offices across the U.S. are set to open as part of this venture.
The private bank is designed to serve high-net-worth individuals, venture-capital firms, private-equity firms, private family foundations, nonprofits, and clients in the real estate and life sciences sectors. The group forecasts the unit will break even by the latter half of next year following a $35 million startup cost investment. By 2025, it is projected to add 5 cents per share to earnings. This projection aligns with InvestingPro's data showing that Citizens Financial Group has a low P/E ratio relative to near-term earnings growth, which is currently at 5.63.
This development marks Citizens' second nationwide initiative after the launch of their digital platform, Citizens Access digital bank, which originated as an iPhone financing offer. The incorporation of former First Republic Bankers will enable Citizens to broaden its private-client business, act as a service provider to family-owned companies, and offer counsel on M&A transactions.
Previously, Citizens made acquisitions in the registered investment adviser space but decided against further acquisitions due to high M&A prices. The addition of First Republic bankers is expected to assist in this regard. The bank regards wealth management as a catalyst for customer loyalty and identifies potential in catering to the financial needs of baby boomer women, who are anticipated to manage approximately $30 trillion in wealth over the next decade.
InvestingPro data shows a market cap of 11.8B USD for Citizens Financial Group, and a healthy revenue growth of 11.38% in the second quarter of 2023. The bank's strategy of investing in initiatives like the private banking unit could potentially drive future growth. The bank also pays a significant dividend to shareholders, with a dividend yield of 6.57% in 2023.
Furthermore, it's worth noting that according to InvestingPro Tips, the management of Citizens Financial Group has been aggressively buying back shares, a move often seen as a vote of confidence in the company's future. The company's share price has fallen significantly over the last three months, and it's trading at a low earnings multiple, which might present a buying opportunity. For more insights like these, consider subscribing to InvestingPro, which offers additional tips and real-time metrics.
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