CIT Group Hired Boston Consulting to Review Its Operations

CIT Group Inc. has hired an outside consultant to help it figure out how to make the most of its remaining operations following an agreement to sell its commercial air-leasing operations.

The lender, which reports third-quarter earnings on Tuesday, hired Boston Consulting Group in the summer to review the bank's operations. The firm already is pushing hard to implement cost-cutting plans announced earlier this year.

CIT Chief Executive Ellen Alemany confirmed Monday that the firm had hired the outside consultant. It did so "to assist us in developing opportunities in our key lines of business that build on our expertise and differentiation, and maximize shareholder value creation," she said.

Ms. Alemany isn't expected to announce any initiatives from the review imminently, a person familiar with the matter said. The lines of business that could be affected haven't yet been decided and the review is broad based, this person said.

While banks routinely use consultants to help with a variety of tasks, such a strategic review often leads to significant new profitability initiatives. For instance, Dallas-based Comerica Inc. hired Boston Consulting Group earlier this year and its advice contributed to major new plans for expense cuts and revenue increases.

CIT earlier this month agreed to sell its commercial-air leasing business to Chinese conglomerate HNA Group's Avolon unit for about $4 billion. In connection with that deal, the bank plans to return almost $3 billion to shareholders from the sale with the potential for some more.

That sale rid the bank of a business that had become problematic despite its high yields on leases. After the air leasing sale, CIT will still have a unique assortment of finance businesses. Many, like railcar leasing, date back to the years before the financial crisis when CIT wasn't a bank.

CIT still faces headwinds: Its return on tangible equity was 7% in 2015 versus an average 10.6% for peers, according to a bank presentation. The bank's stock also trades at just 65% of book value.

CIT says it is working to turn that around. In March, as Ms. Alemany prepared to take over from outgoing CEO John Thain, she set a number of new goals for the bank. These included a return on tangible equity of 10% and $125 million worth of cost cuts by 2018.

The lender plans to make a third of those cost cuts by the end of 2016. "We are very focused on this initiative," Ms. Alemany said Monday.

In one move that proved to be controversial with employees, the bank recently removed the office plants to save on maintenance costs, people familiar with the matter said.

(END) Dow Jones Newswires

October 24, 2016 15:05 ET (19:05 GMT)

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