Rosey's Outlook


by J.D. Rosendahl

Monday, June 14, 2010

CitiFinancial to close 330 branches

CitiFinancial to close 330 branches, 3 in Mo.

CitiFinancial said it will close 330 branches in the U.S., including three in Missouri and eight in Illinois.

Baltimore-based CitiFinancial, the consumer finance arm of Citigroup (NYSE: C), was not immediately disclosing which branches it will shutter, spokeswoman Shannon Bell said.

As part of a reorganization plan, CitiFinancial is separating its U.S. business full-service branch and servicing segments, and will convert 182 of its full-service U.S. branches into servicing centers. CitiFinancial also said it would rename its business after the reorganization and by the end of the year.


This makes all the sense in the world. Closing down or shrinking slowing business units or locations within a bank that needs to raise capital is the right decision.

However, it will place more commercial real estate back on the market and increase supply of property for sale or lease.

A few months ago, I noticed Wells Fargo was closing branch offices in some locations in CA where they have duplicate locations associated with the merger of Wachovia.

As the FDIC continues to close down banks, and merge them into other banks, we could definitely see a closure of bank locations due to the FDIC trend.

The short of the story is the banking industry is consolidating, and with roughly 8,000 banks and all of those related branches for each bank, we should expect this to create more commercial real estate supply right when demand is all but dead.

And whether its via big bank mergers of the past, trimming poor performing units, or FDIC closures, banks will continue for years to reduce office space and locations.

Expect this banking trend to negatively impact commercial real estate values. It’s a part of the greater over supply issue of the entire real estate market, but specifically impacting commercial real estate.

Hope all is well.

J.D. Rosendahl, Rosey