PhillyDeals: Citizens Bank boss rings bell, and plots future

Bruce Van Saun, tapped to head Citizens Financial Group and its 1,200 Citizens Bank and Charter One bank branches as it is spun off by Royal Bank of Scotland, Wednesday ended months of silence - imposed by Securities and Exchange Commission share-sale rules - to talk about Citizens' prospects after its initial public offering Tuesday.

Citizens shares priced at $21.50, below its target of up to $24. Shares rose 7 percent in first-day trading Wednesday, to close at $23.58, enriching the Wall Street brokers who managed the sale. But the price remains well below the industry average for big multistate banks.

To boost profits and get the share price up, Citizens needs to increase sales while cutting costs, said Van Saun, from the New York Stock Exchange, where he rang the symbolic opening bell.

How can Citizens grow and shrink at the same time?

"We looked hard at our use of vendors. You can get more buying power and control your spending when you have [fewer] vendors and move some of that offshore," especially in tech support and software applications. He moved those services to India, he said.

"That frees us to put in more loan officers and originators in areas where we have potential to grow. We are adding people in commercial lending, in mortgages, in wealth, and in business banking."

He doesn't see a need to close a lot of branches.

Even at a modest price, Van Saun called the sale a triumph: "We placed over $3 billion in stock, which makes us the biggest bank IPO in U.S. history" and the second-biggest U.S. IPO this year after Internet giant Alibaba, which raised $25 billion.

The price might have been higher but for Citizens' past financial underperformance, plus investors' concerns that RBS could flood the market when it sells the other three-quarters of Citizens over the next few years, he added.

What's the difference between Citizens and any other big bank (besides the fact that it owns naming rights for the Phillies stadium)? "We'll distinguish ourselves. We have that customer focus, where we deliver the best possible banking experience," Van Saun said. "As you walk into one of our branches, you should be personally greeted, you should have an array of products that are easy to understand."

He sees Citizens, like North Carolina's BB&T, as a model for community involvement; like its local rival PNC, as a model for balancing consumer and business service.

If profits and share prices don't go up, will Citizens get sold to some bigger bank? Van Saun says the current tough regulatory environment, in which examiners are reluctant to approve deals, makes offers unlikely.

"We have a great opportunity to run this bank, to get our returns up, to differentiate ourselves and create value for the franchise," Van Saun concluded. "That's our focus."