Information on Chicago Area Charter 1 one bank branches

The Royal Bank of Scotland Group is expanding its reach in North America with a $10.5 billion cash purchase of Charter One Financial through its Citizens Financial Group Inc. subsidiary.

Under the deal announced late Tuesday, the merged Citizens bank would become one of the country's 10 largest and extends its reach beyond the Northeast and Mid-Atlantic regions to Chicago and the Midwest.

Rhode Island-based Citizens will grow to $128.8 billion in assets, have more than 24,000 employees and more than 1,400 branches across 13 states. It will keep its corporate headquarters in Providence.

The acquisition adds $43 billion in assets, 616 retail branches, including 160 in-store locations, and 8,400 employees.

The purchase comes as Charter One has made a big push into the Chicago market.

The Cleveland-based bank entered Chicago in 1999, when it bought up St. Paul Bancorp, and later bought Liberty Federal Bank in Hinsdale and the the deposits of the failed Superior Bank in 2001. It now has 108 bank branches in the Chicago area, and is the sixth- largest bank in the metropolitan area based on local deposits.

Bank officials could not be reached to comment on what impact the Charter One acquisition will have on that bank's expansion plans in the Chicago area. An analysis by research firm SNL shows there is no overlap in Chicago between the two banks, which lessens or may even eliminate the chance of any branch closings or layoffs.

The deal also marks the third large foreign bank to come into Chicago: Dutch giant ABN Amro purchased LaSalle Bank in 1979, and Toronto-based Bank of Montreal bought Harris Bank in 1984.

Citizens is offering $44.50 for each Charter One share, a nearly 24 percent premium over Tuesday's closing price. The deal is expected to close in the fourth quarter. Charter One shares surged $7.97, or 22 percent, Wednesday to $43.92.

The deal gives Citizens major markets in Illinois and five other new states: Ohio, Michigan, New York, Vermont and Indiana. It will also expand Citizens' business in western Massachusetts, Connecticut and Pennsylvania.

"This is a significant transaction for Citizens," Lawrence K. Fish, the company's chairman, president and chief executive, said. "However, this is not about size as we will continue to be focused locally, providing our legendary service and outstanding products in every market we serve."

The deal allows Charter One to keep its national bank charter and continue operations based in Cleveland.

Royal Bank chief executive Fred Goodwin said he expects growth in revenue at the combined U.S. business of $378 million a year after three years as it sells more Citizens products, such as business bank accounts, through Charter One's branches.

Charter One's chief executive, Charles John Koch, will continue to serve as chairman of the Cleveland-based bank and has been named a vice chairman of the Citizens Financial Group board, the companies said.

Contributing: Tammy Chase, AP, Bloomberg News