U.S. Bancorp (NYSE:USB) agreed to purchase the Charter One Bank franchise owned by RBS Citizens Financial Group, a subsidiary of the Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) (AMS:RBS) including its Chicago retail branch network, small business operations, and select middle market relationships.

U.S. Bancorp USB

Under the terms of the agreement, U.S. Bancorp (NYSE:USB) will acquire Chicago One Bank’s 94 branches and 800 employees for a deposit premium of $315 million or 6%, $5.3 billion of deposits, and $1.1 billion of loans.

According to U.S. Bancorp (NYSE:USB), its total deposits in Chicago will be approximately $11.3 billion after the closing of the transaction. According to the bank, almost 35% of the $5.3 billion deposits it acquired are non-interest bearing and NOW accounts. Forty eight percent (48%) are money market and savings accounts and 17% are time deposits.

The bank said the acquisition is expected to meet or exceed its internal financial hurdles for internal rate of return and earnings per share accretion.

Acquisition doubles U.S. Bancorp’s market share in Chicago

In a statement, John Elmore, vice chairman of community banking and branch delivery for U.S. Bancorp (NYSE:USB) said,  “This transaction will double our market share in Chicago, giving us a great opportunity to not only deepen existing customer relationships, but a chance to serve new customers with our extensive mix of products and services.”

On the other hand, U.S. Bancorp (NYSE:USB)’s Chicago market president Marsha Cruzan said, “Chicago is a vibrant and important market for U.S. Bank. We’ve worked hard to grow our presence here over the past five years and this latest acquisition strengthens our position as a top bank in the Chicago area.”

U.S. Bancorp (NYSE:USB) will continue to operate the newly acquired Chicago branches from RBS Citizens Financial under the Charter One brand during the transition.  Once the acquisition is completed, it will change the name of the 94 branches.

RBS presence in the U.S. remains large

Commenting on the sale Charter One, Bruce Van Saun, CEO of RBS Citizen Financial said, “We thought it would be better to take some chips off the table.” The company expects to gain $315 million from the transaction and plans to reinvest the money in its business to strengthen its balance sheet.

RBS Citizens Financial is currently preparing for its initial public offering (IPO). The company is also hiring wealth managers and improving its profitability before its public offering. Its presence in the United States is still large with 1,400 branches and its assets is worth around $120 billion across 11 states in the country.