CIT Group to Expand Banking Unit in Search of Cheaper Funding
Although CIT Group has long been a source of funding for midmarket companies, the firm is looking now to expand its own funding source–at a lower cost.
The New York Stock Exchange-listed company plans to enlarge the depositor base of its banking unit CIT Bank, said Chairman and Chief Executive John Thain.
Speaking at CIT’s Investor Day presentation Thursday, Thain said CIT Bank is intended to be the primary funding source for CIT’s U.S. loan origination business.
The bank, which operates the BankOnCIT.com site, intends to take deposits from commercial clients, and “at some point, take retail deposits,” said Thain. “We will expand our deposit-taking capacity.”
As such, CIT will seek the opportunistic acquisition of depositor accounts, according to Thain.
“The place that’s most interesting to us is [where we can] become more bank-like through acquisition,” he said.
CIT, with about $34 billion of assets, provides loans for midmarket companies, as well as equipment leasing, commercial real estate, trade financing and other credit. Having a sizeable and reliable deposit base helps to keep funding cost low, said CIT executives.
In the past year, CIT Bank’s assets have more than doubled, standing at about $3.4 billion as of March 31, up from the year-ago level of $1.4 billion, the firm said during the presentation.