CIT Group Hired Boston Consulting to Review Its Operations
October 24 2016 - 3:20PM
Dow Jones News
CIT Group Inc. has hired an outside consultant to help it figure
out how to make the most of its remaining operations following an
agreement to sell its commercial air-leasing operations.
The lender, which reports third-quarter earnings on Tuesday,
hired Boston Consulting Group in the summer to review the bank's
operations. The firm already is pushing hard to implement
cost-cutting plans announced earlier this year.
CIT Chief Executive Ellen Alemany confirmed Monday that the firm
had hired the outside consultant. It did so "to assist us in
developing opportunities in our key lines of business that build on
our expertise and differentiation, and maximize shareholder value
creation," she said.
Ms. Alemany isn't expected to announce any initiatives from the
review imminently, a person familiar with the matter said. The
lines of business that could be affected haven't yet been decided
and the review is broad based, this person said.
While banks routinely use consultants to help with a variety of
tasks, such a strategic review often leads to significant new
profitability initiatives. For instance, Dallas-based Comerica Inc.
hired Boston Consulting Group earlier this year and its advice
contributed to major new plans for expense cuts and revenue
increases.
CIT earlier this month agreed to sell its commercial-air leasing
business to Chinese conglomerate HNA Group's Avolon unit for about
$4 billion. In connection with that deal, the bank plans to return
almost $3 billion to shareholders from the sale with the potential
for some more.
That sale rid the bank of a business that had become problematic
despite its high yields on leases. After the air leasing sale, CIT
will still have a unique assortment of finance businesses. Many,
like railcar leasing, date back to the years before the financial
crisis when CIT wasn't a bank.
CIT still faces headwinds: Its return on tangible equity was 7%
in 2015 versus an average 10.6% for peers, according to a bank
presentation. The bank's stock also trades at just 65% of book
value.
CIT says it is working to turn that around. In March, as Ms.
Alemany prepared to take over from outgoing CEO John Thain, she set
a number of new goals for the bank. These included a return on
tangible equity of 10% and $125 million worth of cost cuts by
2018.
The lender plans to make a third of those cost cuts by the end
of 2016. "We are very focused on this initiative," Ms. Alemany said
Monday.
In one move that proved to be controversial with employees, the
bank recently removed the office plants to save on maintenance
costs, people familiar with the matter said.
(END) Dow Jones Newswires
October 24, 2016 15:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Comerica (NYSE:CMA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Comerica (NYSE:CMA)
Historical Stock Chart
From Apr 2023 to Apr 2024