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Building a Better Bank From Scratch

Barry Ritholtz

(Bloomberg Opinion) -- How does an older bank unlock the value of a nimbler, faster-growing division? That was the challenge facing Bruce Van Saun, then CFO at the Royal Bank of Scotland (RBS). He had joined the storied firm in 2009, after their £500 billion bailout of loans and guarantees from the U.K. government.

Within RBS, the Citizens group in the U.S. was growing quickly by appealing to commercial clients and middle market companies. But the skills and personnel needed to achieve success with what was effectively a start-up are very different from the assets needed to succeed as a megabank.

In an unusual step, Van Saun decided to IPO the Citizen’s division. These types of transactions typically involve a sale or a (majority-owned) spinoff. But Van Saun wanted to shake up the culture at the new firm, and an IPO would allow him to recruit more entrepreneurial sorts of bankers that might not be attracted to a sleepy, foreign-owned, recently bailed-out bank.

Citizens Financial Group (CFG) listed its initial public offering in 2014; today, it has $164.4 billion in assets, 2,900 ATMs and 1,100 branches in 11 states. The bank has grown into the 13th largest bank in America. Van Saun is its Chairman and Chief Executive Officer. He was named American Banker’s 2019 “Banker of the Year” and sits on the Federal Reserve Bank of Boston Board.

The bank (among other things) finances most iPhone purchases or monthly leases.

His favorite books can be seen here; a transcript of our conversation is available here.

You can stream/download the full conversation, including the podcast extras on Apple iTunes, Overcast, Spotify, Google, Bloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.

Next week, we speak with Brian Kelly, better known as “The Points Guy.” Kelly took an interest in credit card and airline points, and turned it into a substantial media business, with 60 employees and 7 million unique visitors a month. 

To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.net

To contact the editor responsible for this story: Sarah Green Carmichael at sgreencarmic@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

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