Sandy Weill’s Citigroup is gobbling up yet another bank – European American Bank.
For $1.95 billion, most of it in cash, Citigroup’s big banking unit Citibank will acquire EAB from its Dutch parent, global bank ANB AMRO. The deal, announced after stock markets closed yesterday, will double Citibank’s presence in the New York market.
Citibank will add EAB’s 97 area branches to Citibank’s 96 branches, and give it a boost in a new market war against J.P. Morgan Chase, which has the largest branch operation in the New York area.
The EAB deal, which is being financed by $1.6 billion in cash and the assumption of $350 million in preferred stock, is expected to close by this summer.
Citibank said the merger will immediately add to earnings.
EAB has $15.4 billion in assets. It wasn’t known whether any branches would be closed after the combination.
ABN AMRO will use the proceeds to pay for part of its $2.75 billion purchase of Chicago-based Michigan National Corp.
ABN has been focusing for the last decade on building a banking empire in the Midwest.
The Dutch already have acquired several of the Midwest’s biggest banking operations, including Chicago-based LaSalle Bank. ABN also has bought up Midwest investment banks, including Chicago Corp. and Alfred Berg.
The Dutch bank is the latest European operation to pull out of an expensive foray into the New York market.
London-based National Westminster Bank sold its 900 branches in the area to FleetBoston Financial Corp. Another British bank, Barclays PLC, sold its 62 New York branches to Bank of New York.
ABN said it paid $332 million for EAB, starting with its 1980s expansion efforts around the world. It bought its first 20 percent stake in the 1980s, increased the stake to 66 percent in 1990 and bought the remaining 34 percent in 1991.
It tried to bolster EAB last year by buying rival Olympian New York Corp. for $22.5 million.
Weill, 66, the $10-million-a-year head of Citigroup, has built it into the world’s largest financial services operation with a market capitalization of $280 billion – seven times the size of ABN.
Citigroup’s holdings include Solomon Smith Barney, Travelers Insurance, Primerica Financial Services and No. 1 U.S. consumer finance company, Associates First Capital.
Weill’s co-chairman is politically connected former Treasury Secretary Robert Rubin.