Decision relative to the application of Citizens Financial Group, Inc., Providence, Rhode Island and certain related entities to acquire the Bank of New Haven, New Haven, Connecticut
By the Division of Banks
Citizens Financial Group, Inc., Providence, Rhode Island and its indirect owner, the Royal Bank of Scotland Group, plc, Edinburgh, Scotland (the "Group") and other related entities of the Group as well as the Governor and Company of the Bank of Ireland ("Bank of Ireland"), Dublin, Ireland (hereafter referred to collectively as the "Petitioners" or "Citizens") have petitioned the Board of Bank Incorporation (the "Board") pursuant to Massachusetts General Laws chapter 167A, sections 2 and 4, to acquire The Bank of New Haven ("BNH"), New Haven, Connecticut in a multi-step transaction. As part of this transaction, the Petitioners will establish and control through their subsidiary, Citizens Bank of Connecticut ("CBCT"), a wholly-owned Connecticut corporation, for the sole purpose of facilitating this acquisition. That subsidiarywill merge with and into BNH's parent company, Bank of New Haven Bankshares, Inc. ("BNHB"), New Haven, Connecticut. After the merger, BNHB will be liquidated into CBCT leaving BNH as the direct subsidiary of CBCT. Subsequently, BNH will merge with CBCT which will be the continuing entity. Upon consummation of this multi-step transaction Citizens will control a single Connecticut-chartered bank. Citizens is the bank holding company for Citizens Bank of Massachusetts.
Notice of the petition by Citizens was published as directed by the Board thereby affording opportunity for interested parties to submit comments. A public hearing relative to this application was held by the Board on July 10, 1997 and the period for filing comments has expired. The Board reviewed the application, comments received at the public hearing and all related documents in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether any net new benefits as well as public convenience and advantage would be promoted by approval of the proposed transaction. The record of performance under the Community Reinvestment Act ("CRA") by the bank subsidiaries of the Petitioners and BNH were also factors considered by the Board. The additional requirements of the Commonwealth's 1996 Interstate Banking and Branching Act were also significant factors considered by the Board's in regard to this application.
One provision of law requires the Board to have received notice from the Massachusetts Housing Partnership Fund (the "MHPF") that satisfactory arrangements for the proposed transaction have been made by Citizens pursuant to section 4 of said Chapter 167A and guidelines adopted by the MHPF. The Board has received notice from the MHPF, in a letter dated June 6, 1997, that satisfactory arrangements have been made for this transaction.
As an interstate transaction, the reciprocity of the laws of Citizen's home state must be reviewed. Citizen's home state for determination of applicable law is Rhode Island. Under Massachusetts law, the determination of the reciprocity of the laws of another state rests solely with the Commissioner of Banks. The Commissioner has previously ruled in transactions involving Citizens that Rhode Island law is reciprocal and does expressly authorize a similar transaction by a Massachusetts holding company under conditions no more restrictive than those imposed by chapter 167A. Accordingly, the proposed transaction is permissible under the Commonwealth's Interstate Banking Act and, therefore, the Board will proceed to consider whether other statutory requirements are met by this application.
Citizens is a bank holding company within the meaning of both federal law and said chapter 167A of the General Laws. Citizens currently has four bank subsidiaries, Citizens Bank of Massachusetts, Boston, Massachusetts; Citizens Bank of Rhode Island, Providence, Rhode Island; Citizens Bank New Hampshire, Manchester, New Hampshire; and Citizens Bank of Connecticut, New London, Connecticut. At March 31, 1997, Citizens had total consolidated assets of $15.6 billion. Citizens is owned by the Group, which is the 97th largest banking organization in the world based on figures published in July 1996 with total consolidated assets of approximately $114.1 billion as of March 31, 1997, and by the Bank of Ireland which has total consolidated assets assets of approximately $ 31.1 billion as of September 30, 1996. The Group holds 76.5% of Citizens' outstanding common stock, while the Bank of Ireland holds 23.5% of such stock.
The Bank of New Haven ("BNH"), is a Connecticut-chartered bank and trust company established in 1979. As of March 31, 1997, BNH had total consolidated assets of $ 334 million. BNH currently operates eleven branches located in south-central Connecticut. BNH conducts a general commercial banking business and its deposits are insured by the Federal Deposit Insurance Corporation.
The application, supporting documents and the comments received at the public hearing have established an extensive record on this petition which has been reviewed consistent with statutory provisions and the policies of the Board. Analysis has been provided on the impact of the transaction on competition in applicable municipalities and markets in Connecticut and the impact within the Commonwealth. Information has also been established in the record on the promotion of convenience and advantage which will result for the banking public in Connecticut as well as customers of all Citizens' bank subsidiaries, including Citizens Bank of Massachusetts. The authority for each bank subsidiary to act as agent for each other and thereby allow customers of each bank to conduct most basic banking services at any subsidiary bank's offices in four New England states was specifically mentioned in the application. These factors along with the Board's review of financial and managerial factors related to the proposed transaction weigh in favor of its approval.
Related to the issue of public convenience and advantage is the record of performance under CRA. For financial institutions not directly under the jurisdiction of the Commonwealth, the Board initially looks to the publicly available descriptive rating and evaluation by a federal or other state bank regulatory agency. The CRA activities of BNH and Citzens' bank subsidiaries were specifically discussed at the public hearing. The "Outstanding" ratings of all Citizens' subsidiary banks were particularly noted in the application.
Based on the record on this matter including the testimony received at the public hearing considered in light of all relevant statutory and administrative requirements, the Board finds thatcompetition among banking institutions will not be unreasonably affected, that public convenience and advantage will be promoted by consummation of the proposed transaction, and that records of performance under CRA by the banks involved in this transaction are consistent with its approval. Therefore, in accordance with these findings and pursuant to the statutory authority cited herein, the Board hereby approves the application and:
- authorizes Citizens through its subsidiary Citizens Bank of Connecticut to acquire up to 100% of the common stock of BNH Bankshares, Inc. and The Bank of New Haven; and
- for the Group and the Bank of Ireland to indirectly acquireBNH Bankshares, Inc. and The Bank of New Haven.
The approvals granted herein are subject to the condition that all related transactions are completed within one year of the date of this Decision.
| Thomas J. Curry Commissioner of Banks | |
| Frederick A. Laskey Senior Deputy Commissioner of Revenue | Board |
| Joseph D. Malone Treasurer and Receiver-General | |
| August 13, 1997 Date |