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CIT Group to cut $125M in operating costs


CIT Group (CIT) will cut $125 million in operating expenses by 2018, spin off its commercial air division and focus on its core commercial lending and leasing businesses in a strategic plan the banking company announced Wednesday.

The New York City-based firm will focus on becoming a middle market bank that serves customers with integrated financing and deposit products, said incoming Chairwoman and CEO Ellen Alemany.

CIT Group projected the plans would help it achieve a 10% return on tangible common equity by 2018. The company also said it would improve funding costs by increasing its deposit base and return excess capital to shareholders, subject to regulatory approvals.

"Our strategic plan of focusing on our core businesses and leveraging the strength of our franchises and risk management practices will maximize value for shareholders and position CIT as a leading national middle market bank," said Alemany.

Founded in 1908, CIT Group is a financial holding company with more than $65 billion in assets. CIT Bank, its chief banking subsidiary, has more than $30 billion in deposits and more than $40 billion in assets. The company also provides equipment financing and leasing to the transportation sector.

The turnaround plan announcement follows a 12.8% fall in the value of CIT Group's shares since Dec. 31. The stock was down 3.84% at $33.29 a share in morning trading Wednesday.

The stock slide came despite CIT Group's August completion of a $3.4 billion cash and stock acquisition of Pasadena-based OneWest Bank's parent company. CIT Group has predicted the transaction would boost its banking services for small and middle market businesses.

In Wednesday's announcement, CIT Group said it plans to complete the integration of OneWest Bank by year's end.

The acquisition was led by outgoing CEO and Chairman John Thain, the former Merrill Lynch chief executive who in October announced plans to retire from his bank posts by early May. Alemany, the former CEO and chairwoman of RBS Citizens Financial Group, is Thain's appointed successor.

Follow Paste BN reporter Kevin McCoy on Twitter: @kmccoynyc