No Regulatory Bumps Seen In Caja Madrid Buy Of City National
Written by Lou Ortiz on April 17, 2008
By Lou Ortiz
The nearly $1 billion majority acquisition this week of Miami-based City National Bank of Florida by Spain’s Caja Madrid should see smooth sailing through the US regulatory process.
There are no competitive issues, Caja Madrid has not been beset by the subprime residential mortgage crisis, City National Bank of Florida has a good reputation and its chairman and CEO, Leonard Abess, is "one of the most respected bankers in Florida," said Ken Thomas, a Miami banking expert.
"I think the deal will be approved," Mr. Thomas said. "I don’t see any roadblocks."
On April 14, Caja Madrid, the second-largest savings bank in Spain, agreed to buy 83% of City National Bank of Florida stock for $927 million. Mr. Abess, who will continue to run the bank as the chief executive officer, will retain the other 17%.
"The purchase price values the total company at $1.117 billion," according to a statement by the bank. There will be no personnel changes at the bank, nor any layoffs, the statement said.
"Our name stays the same," Mr. Abess said. "We’ll just keep building the bank and keep making money."
Growth is to come through expansion. The bank is opening offices in Orlando and Stuart. But it won’t stop there.
"We’re going to expand statewide," Mr. Abess said. "We’re going to the major cities in Florida."
City National Bank of Florida, which was established in Miami Beach in 1946, is one of the largest community banks in the nation, with more than $2.75 billion in assets, 400 employees and 18 banking offices in South Florida.
Caja Madrid has more than 2,000 branches in Spain, with assets totaling $250 billion. The deal between the banks requires regulatory approval in the US and Spain.
Mr. Abess said the bank would apply for approval with the Federal Reserve Board as soon as possible and he expects a response before the end of September.
Federal Reserve Bank officials in Washington said the time to approve applications varies and they declined to give an estimate. But they said the regional Federal Reserve office in Atlanta could approve applications, bypassing the main office in Washington.
Other local bank acquisitions by Spanish financial institutions have gone through the US regulatory process without problems.
In July 2007, Spain’s Banco Popular Español bought 100% of TotalBank stock for $300 million in cash. The deal allowed the bank, third largest in its country, a foothold in the US financial market. A year before the purchase, the Federal Reserve had allowed Banco Popular Espanol, which has nearly $90 billion in assets, to open an international representative office in Miami.
Banco de Sabadell, Spain’s fourth-largest financial group, had a presence here before acquiring TransAtlantic Holding Corp., owner of TransAtlantic Bank, in February 2007. The $175 million deal allowed Sabadell, with $86 billion in assets and 1,184 branches globally, to expand its consumer banking services here.
Caja Madrid’s purchase of City National Bank of Florida provides it with the same opportunities.
"This represents a great opportunity to significantly expand our operation into the United States. Miami and the Florida markets are very attractive to Caja Madrid," said D. Miguel Blesa de la Parra, chairman of Caja Madrid. "We believe that this bank [City National of Florida] and its management team are perfectly suited to serve as the foundation for our expansion into these new markets going forward."