Citizens to Avoid ‘Fire Sale’ in Unloading $9.2 Billion in Loans

Citizens Financial Group Inc. Chief Financial Officer John Woods vowed the company won’t do deals that require it to book losses as it looks to reduce a $13.7 billion portfolio of unwanted loans.

(Bloomberg) — Citizens Financial Group Inc. Chief Financial Officer John Woods vowed the company won’t do deals that require it to book losses as it looks to reduce a $13.7 billion portfolio of unwanted loans.

Citizens is looking to scale down its portfolio of non-core loans by $9.2 billion by the end of 2025 and may increasingly turn to “opportunistic” asset sales to pull that off, according to a presentation on the firm’s website. Proceeds from the moves will allow the bank to pay down high-cost funding from the likes of the Federal Home Loan Bank system as well as increase lending for home equity lines of credit and credit cards, the presentation said.

The country’s regional banks have been under pressure to shrink their balance sheets to strengthen capital and improve liquidity after they were stung by heightened interest rates. But those sales have, at times, forced lenders to book losses because the underlying value of the assets has dropped amid the Federal Reserve’s aggressive push to raise rates.

That won’t be the case at Citizens, Woods said, noting the vast majority of the loans in the non-core portfolio are auto loans or those tied to education and other retail products.

“There’s no need to actually rush out and have a fire sale in this rate environment,” Woods said at the Barclays Global Financial Services Conference in New York. “We’re feeling really confident that there’s no need to rush out and accelerate something and crystallize some losses in the non-core book.”

Read more: Regional Banks Find Themselves Struggling in No Man’s Land

Separately, Citizens has been building out a new private bank offering, hiring 50 senior bankers and 100 support staff in markets across New York, Massachusetts, Florida, and California. The company is targeting customers with a net worth of $10 million or more. 

Loan growth tied to the private bank offering as well as other core businesses will exceed the run-off of loans in the non-core portfolio, Citizens said in a presentation on its website. 

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