Citizens’ community role seen as receding
Corporate profile increasingly has out-of-town feel
Under Lawrence Fish, Citizens Financial Group Inc. worked hard to portray itself as a banking company with a deep Boston presence. It was based in Providence, but the boss lived here, and he had a big public profile. Fish was often named as one of the most powerful people in Boston and grew Citizens to the second-biggest bank in the region.
But Fish retired as CEO in 2007 and gave up his chairman’s role last March, following the financial crisis that pitched Citizens’ parent, the Royal Bank of Scotland, into the biggest bailout in British history. Since last year, the Scottish bank has been putting its own people in charge, and watching the exit of virtually the entire former executive team.
Last week, the chief of Citizens’ Massachusetts bank, Robert Smyth, retired - the sixth senior executive to go in recent months, including the chief financial officer and bank counsel. In June, the president of the Rhode Island-based parent, Citizens Financial, also left; Citizens said James G. Connolly would not be replaced.
The executive now running the company is Ellen Alemany, hired away from Citigroup in early 2007. She is chairwoman and chief executive of RBS Americas and of Citizens Financial Group. Her main office is in Stamford, Conn., marking the first time the head of Citizens has lived closer to Manhattan than to Boston or Providence.
“That’s probably as telling as anything else,’’ said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University’s School of Law. Fish, he said, tried to market Citizens “as a warm and fuzzy community bank. Now it sounds more like remote control.’’
Alemany keeps offices in Boston and Providence as part of her job overseeing the $167 billion bank, which has branches in 12 states. In her role running RBS Americas, she is the primary contact for regulators for Royal Bank’s North American and Latin American operations, including the banks, transaction processing, and RBS Global Banking and Markets, which has a trading floor in Stamford.
Citizens insists there is no change in its local focus. Spokesman Mike Jones said Alemany spends one to two days a week in Boston and about the same amount of time in Providence.
“We continue to operate with local management and local decision-making,’’ Jones said, noting that Citizens had named a Boston executive, Stephen Woods, to replace Smyth as president of Citizens Bank of Massachusetts. Woods joined the company in 2007 from Key Corp. in Cleveland. Moreover, Jones said, the bank has a president here, as it does in each state. It also has the head of its retail and commercial businesses in Boston, and four of its five vice chairmen in Boston or Providence.
Banking consultant Suzanne Moot said the changes are more likely to have an impact on Citizens’ local presence as a civic leader than as a lender.
“It is kind of sad. It wasn’t that many years ago when we had four or five significant banking organizations here in Massachusetts and now they’re all gone,’’ she said.
Citizens and its parent are under significant pressure as they weather the slow economy and the after-effects of the financial storm of 2008. The bank took a $300 million capital infusion from the Royal Bank in the first quarter and wrote off $451 million in bad loans. And things still look risky on the horizon - the bank set aside $609 million for future loan losses. Citizens is scheduled to report earnings next week.
Citizens Financial Group lost $929 million last year. The Royal Bank, which is 70 percent owned by the British government after a massive bailout, reported a $34 billion loss. The Royal Bank’s US bank operation, assembled through acquisitions, is likely to have trouble growing, now that its owner’s pocketbook is so strained, analysts said.
“They’re in a difficult spot,’’ Hurley of Boston University said. “Their whole business model has been clipped.’’
The most recent cost-cutting includes the elimination of 1,250 US jobs over the next two years. That comes on top of 900 job cuts announced last December. The Royal Bank’s former chief agreed, under pressure, to cut his pension in half. Citizens has sold one of its private jets; the other is still for sale.
Beth Healy can be reached at bhealy@globe.com. 