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 Citigroup Inc. has apparently been in talks to make an acquisition of a U.S. regional bank and could make the purchase this month, even though its third-quarter results caused analysts to doubt that the bank could afford to make the purchase. So which regional banks could Citi be in secret talks with?
Well, Oppenheimer & Co. banking analyst Meredith Whitney -- who believes Citi will be unprofitable for years to come -- says Citigroup will have to acquire or shed enough businesses to reinvent itself. According to The Guardian, she said:
"I don't see Citigroup making any money over the course of the next couple of years," Whitney said. "Three out of four of Citigroup's major businesses don't make money, and one, Smith Barney, is making a lot less money."Currently, Citigroup gets about half its revenue from outside the U.S. Citigroup could increase its profit through boosting its deposits through an acquisition and adding more retail-banking units. Its retail-banking unit has branches in the Northeast, California and Texas and abroad. Therefore, it makes sense that in order to compete with the big guys -- Bank of America Corp, Wells Fargo & Co., and J.P Morgan Chase & Co. -- the bank will have to bulk up on its national retail banking units. Nancy Atkinson, a senior analyst at Boston-based research firm Aite Group, told The International Herald Tribune that SunTrust Banks Inc., Regions Financial Corp., BB&T Corp., Comerica Inc. and Zions Bancorp could be possible targets. All of the banks Citigroup is apparently scouting are TARP recipients. SunTrust operates primarily in Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia and the District of Columbia and has 1,600 branch locations and 2,500 ATMs in the southeastern U.S., according to its Web site. The bank also received $3.5 billion in the TARP plan and has $100 billion of deposits. Regions Bank operates almost 1,900 banking offices and 2,400 ATMs in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas and Virginia, according to its Web site. BB&T operates around 1,500 financial centers in the Carolinas, Virginia, West Virginia, Kentucky, Georgia, Maryland, Tennessee, Florida, Alabama, Indiana and Washington. The CEO was quoted as saying the bank was seeking acquisitions with TARP funding. Comerica is a financial services company in Texas and has received preliminary approval from the U.S. Treasury Department to participate in the Treasury's Capital Purchase Program in the amount of $2.25 billion. Zions Bancorp owns 508 domestic branches in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah and Washington. Zions also participates in TARP, with $1.4 billion agreement to buy the company's preferred shares and warrants. Executives said TARP would be used for expansion plans. A Forbes article suggests that Citi should take a peek at Fifth Third Bancorp or KeyCorp as well. Do you have any thoughts on Citi's secret target? Leave us a comment below. - Maria Woehr Categories Deal Video
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