Decision relative to the application of RBSG International Holdings Ltd., Edinburgh, Scotland to become a bank holding company in Massachusetts

By the Division of Banks

RSBG International Holdings Ltd. ("RSBG" or the "Petitioner"), Edinburgh, Scotland has petitioned the Board of Bank Incorporation (the "Board") pursuant to Massachusetts General Laws chapter 167A, section 2 and 4 to become a bank holding company in the Commonwealth. RSBG would become a holding company through its direct ownership of Citizens Financial Group, Inc. ("Citizens Financial"), Providence, Rhode Island. Citizens Financial is the holding company of four banks including Citizens Bank of Massachusetts, Boston. RSBG is a direct subsidiary of The Royal Bank of Scotland, Plc ("Royal Bank"). RSBG was established as part of a corporate restructuring in order to permit the Royal Bank to transfer the ownership of its international operations to a separately owned subsidiary.

Notice of the petition by RSBG was published and posted as directed by the Board thereby affording opportunity for interested parties to submit comments. A public hearing relative to the application was held by the Board on September 30, 1999 and the period for filing comments expired on October 14, 1999. The Board reviewed the application and the oral testimony received at the public hearing. All such information has been considered in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage, including net new benefits, will be promoted by approval of the proposed transaction. The record of performance under the Commonwealth's Community Reinvestment Act ("CRA") by the bank subsidiaries involved in the transaction are 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.

One provision of the law required 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 RSBG pursuant to section 4 of said chapter 167A and guidelines adopted by the MHPF. The Board has received notice from the MHPF by a letter dated October 29, 1999 that satisfactory arrangements had been made for this transaction.

RSBG will become the parent holding company of and direct owner of all of the subsidiaries engaging in international operations which are presently owned by the Royal Bank. Royal Bank as the owner of RSBG would become the indirect owner of these subsidiaries. One of these subsidiaries would be Citizens Financial. As described in the petition, Citizens Financial is one of the 45 largest bank holding companies in the United States and one of the four largest in the New England region. Through its subsidiaries, Citizens Financial offers a wide range of retail and commercial banking services, including residential and commercial mortgage lending and construction loans, commercial loan and leasing services, trust services to businesses and individuals, retail investment services, international banking services, and deposit products. CFG is the parent company for and directly owns four subsidiary banks located in Rhode Island, New Hampshire, Connecticut and Massachusetts. The bank located in Massachusetts is Citizens Bank. Citizens Financial had total consolidated assets of $18.9 billion at March 31, 1999 and total consolidated net income of $114.8 for the six month period ended March 31, 1999.

The purpose of the reorganization is to generate enhanced operational efficiencies by the Royal Bank and its subsidiaries. The petition indicates that such efficiencies will occur as Royal Bank will be better able to focus on its UK banking operations and its international operations will benefit under the management of a single international holding company, RSBG. The Petitioner offers that its overseas operations will benefit from the single focus of RSBG's responsibilities. Although this new structure is expected to generate enhanced operational efficiencies, except for RSBG, no additional assets or entities will be directly or indirectly established or acquired. Accordingly, competition among banking institution will not be affected.

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. Based on the record of this matter considered in light of all relevant statutory and administrative requirements, the Board finds that public convenience and advantage will be promoted and that competition among banking institutions will not be unreasonably affected and that the records of performance under CRA by the banks involved in this transaction are consistent with its approval. Having considered the record established on this application, the Board has found that the applicable statutory and administrative criteria have been met.

In accordance with the findings expressed herein, the Board hereby approves the petition and authorizes the Petitioner to become a bank holding company through its direct ownership of Citizens Financial Group, Inc.

The approval granted herein is 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
Commissioner of Revenue

Board
of Bank
Incorporation

Shannon P. O'Brien
Treasurer and Receiver-General

November 23, 1999
Date