Citizens Financial Group Inc updates
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Citizens Financial Group has agreed to buy boutique investment bank JMP Group for $149m in its fourth acquisition of 2021, signalling an ambition to work on high-profile stock market listings.
San Francisco-based JMP’s services include capital markets advising, underwriting, equity research, and sales and trading with a focus on the healthcare, technology, financial services and real estate industries.
JMP has had junior roles on splashy initial public offerings, including the flotations of stock-trading app Robinhood and home insurance start-up Lemonade earlier this year. It also worked on the IPOs of ride-hailing groups Uber and Lyft in 2019.
“It really takes us into a couple of areas where we don’t have a significant presence currently, notably equities and equity capital markets,” Donald McCree, Citizens vice-chair and head of commercial banking, told the Financial Times on Wednesday.
The deal follows three purchases by Rhode Island-based Citizens earlier this year: of HSBC’s bank branches on the US east coast, of the community bank Investors Bancorp and of valuation consulting firm Willamette Management Associates.
After the HSBC deal, Citizens chief executive Bruce van Saun told the FT the bank, which was spun out of Britain’s Royal Bank of Scotland in 2015, was in the market for further acquisitions.
McCree said Citizens’ desire to do deals was driven by an eagerness to increase revenues at a time when low interest rates, ample liquidity in financial markets and the recovering economy are spurring record demand for banking services.
McCree added that Citizens was still open to further acquisitions, primarily in the sector-specific advisory businesses like environmental services and infrastructure, but that the JMP purchase “completes our product set”.
Citizens is paying $7.50 a JMP share, a slight premium to JMP’s closing stock price on Tuesday. JMP was up 1.5 per cent at $7.42 in midday New York trading. The target bank’s share price has already almost doubled so far in 2021.
The deal adds momentum to a long-awaited consolidation of the US’s highly fragmented banking industry, at least among banks in the middle tier of assets.
S&P Global Market Intelligence last month estimated the total value of bank mergers could exceed $63bn in 2021, which would make it the biggest year for bank deals since the 2008 financial crisis. By the end of last month, there had been 14 such deals worth more than $500m this year, the highest in more than a decade, according to S&P.