CIT Group has completed its purchase of OneWest Bank for $3.4 billion. The combined company will now be categorized as “systemically important,” which means its financial holdings are so large, its collapse could cause a financial crisis. However, according to CIT Group’s Chief Executive Officer John Thain, this consolidation will make the bank stronger and will encourage other smaller banks with less than $100 billion in assets to consolidate.
OneWest Bank, whose board included J. C. Flowers’s John Oros and David Wermuth, will be consolidated with CIT Group’s board, which will continue to be headed up by Thain. Steven T. Mnuchin will serve as Vice Chairman, and Al Frank, a former independent director of OneWest, will join the board. Total board membership will go up from 13 to 15 members.
In a phone interview on the subject, Thain stressed the importance of encouraging lenders with less than $100 billion in assets to consolidate and enjoy the advantages of increased reach in terms of serving customers and more solid infrastructure.
CIT’s purchase of OneWest is one of the biggest in the banking industry since the financial crisis. While there was initially some concern about creating another “too big to fail” lender, this merger has passed all government regulations to ensure the resulting bank will be stable.
“The completion of this transaction advances our strategic efforts to build a leading commercial banking franchise,” said Thain in a press release. “Through the combination of our national lending and leasing program with OneWest’s wholesale lending and branch banking franchise, we’ve created a differentiated provider of banking services for small and middle market businesses. I look forward to working with our newest colleagues as we integrate our two organizations, serve the needs of our customers and communities, and realize the benefits of this transaction for our shareholders.”
The combined CIT/OneWest bank, now called CIT Bank, NA, has more than $65 billion in assets and more than $30 billion in deposits. Shareholders received about $1.867 billion in cash, about 30.9 million shares of CIT, and about 168,000 stock units of CIT.
While the merger will involve some job cuts, Thain has promised those cuts will be “minimal.”
In early trading on Monday, CIT’s stock was down 14 cents to $46.90 a share.