Citigroup's planned acquisition of ABN AMRO Mortgage Group could create the third largest residential mortgage banker in the United States and boost its servicing portfolio to more than a half trillion dollars.
The companies announced today that Citi would acquire the unit -- including a mortgage servicing portfolio around $224 billion and $9 billion in net assets -- from LaSalle Bank Corp., a subsidiary of Dutch banking giant ABN AMRO Bank N.V.
The deal is expected to be done during the first quarter, Citi said.
LaSalle will reportedly continue to originate mortgages through a retail branch network in Illinois, Indiana and Michigan, while Interfirst and its 2,500 mortgage brokers will be included in the Citi acquisition.
Citi said its fourth quarter 2006 originations were $35.7 billion, while ABN AMRO reported its fourth quarter 2005 originations at $10.9 billion, putting the combined entity on track to fund around $45 billion quarterly -- and placing it among the top three U.S. residential originators.
ABN AMRO's residential servicing portfolio cosnisted of 1.5 million borrowers, according to the announcement. Citi reported its third-party servicing portfolio ended 2005 at $293.8 billion as of Dec. 31, 2006. The combined servicing portfolio will start the year around $518 billion.
"The combined company will move from number five to number four in mortgage loan servicing and strengthen CitiMortgage's number three market position in originations, based on third quarter 2006 numbers," Citi said in its announcement.
ABN AMRO said it "expects to record a small book gain on this transaction."