Ulster Bank and First Active parent, Royal Bank of Scotland, has agreed to buy Charter One Financial for $10.5 billion in cash, the largest step yet in an aggressive US expansion by Britain's second largest bank.
The purchase will extend the presence of Royal Bank's Citizens Financial Group unit into six new Northeast and Midwest states, including the cities of Chicago, Detroit and Cleveland. Citizens now operates in New England and the mid-Atlantic.
The purchase will also give Citizens one of the 10 largest US commercial banking operations, with nearly $129 billion of assets. Edinburgh-based Royal Bank expects with the purchase to generate about 25 per cent of its profit in the United States.
Charter One, which is based in Cleveland, said it has $43 billion of assets, 616 banking offices and 8,400 employees in Ohio, Illinois, Indiana, Michigan, New York and Vermont, as well as Connecticut, Massachusetts and Pennsylvania.
The Charter One purchase is easily Royal Bank's largest in the country. Its largest prior US acquisition was a $2.2 billion purchase of Mellon Financial Corp's retail branch network in 2001.