(Adds comments from BB&T CEO, additional information on
Citigroup's strategy; updates share prices)
Sept 3 Citigroup Inc agreed to sell
another 41 branches in Texas to BB&T Corp as the
third-largest U.S. bank cuts back on brick-and-mortar outlets
and focuses on online banking.
The disposal follows the sale of 21 branches in the state to
BB&T in December. Citi also sold its retail banking and credit
card business in Spain to Banco Popular in June and,
according to a source, is now seeking a buyer for its Japanese
retail banking operations.
The latest sale includes retail branches in Dallas, Houston
and Midland that had $2.3 billion in deposits and $87 million in
loans. Dallas and Houston were among the cities that Citigroup
listed in November as being part of its strategy to focus on
doing business in the world's 150 top urban areas.
Citi said on Wednesday its branch network in Texas did not
provide the scale to capture future growth and market share in
traditional retail banking.
The company will continue to offer credit cards and mortgage
loans to individuals in Dallas and Houston online but not
through branches, a spokesman said. It will also continue to
take deposits in Texas from businesses and wealthy people, but
not from retail consumers.
Citi, led by Michael Corbat, has been seeking buyers for
about 50 branches holding $3 billion of deposits in California,
Bloomberg reported in April.
The company's retail banking business has been struggling.
Income from continuing operations at the unit fell 46 percent in
the second quarter. Revenue from the business accounts for
nearly a quarter of total revenue.
The bank had 3,463 branches in 35 countries as of June 30,
with a little over a third of them in North America, according
to a filing.
For BB&T, the latest purchase will boost its total branches
in Texas to 123 with $5.3 billion of deposits and will make the
company the 13th largest bank in the state, Chief Executive
Officer Kelly King told Reuters. BB&T has set a goal of being a
top-five bank in Texas but had been focusing in the past few
years on boosting its commercial operation.
"What this does is move us to where we can effectively play
in the retail space," King said.
BB&T said it would pay a premium to book value of about 5.3
percent of total deposits.
Citi said the sale was not material to its earnings and that
it would continue its other businesses in Texas.
Deutsche Bank Securities was financial adviser and Wachtell,
Lipton, Rosen & Katz provided legal counsel to BB&T for the
Citi's shares, which have gained about 6 percent in the past
year, were up 0.3 percent at $52.11 on the New York Stock
Exchange on Wednesday afternoon. BB&T's shares were down 0.2
percent at $37.46 in afternoon trading.
(Reporting by Anil D'Silva, David Henry and Peter Rudegeair;
Editing by Saumyadeb Chakrabarty and Cynthia Osterman)