RBS in contact with Sumitomo over Citizens sale: sources

Tue Mar 25, 2014 8:51am EDT
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By Matt Scuffham and Taiga Uranaka

LONDON/TOKYO (Reuters) - Royal Bank of Scotland (RBS.L: Quote) has had contact regarding the possible sale of its U.S. retail business Citizens with Sumitomo Mitsui Financial Group (8316.T: Quote), while Mitsubishi UFJ Financial Group (8306.T: Quote) has also considered a bid, people with knowledge of the matter said.

RBS, which is 81 percent owned by the British government, said in November it would speed up a planned stock market flotation of Citizens in New York, aiming to start the process in the second half of 2014 and to fully sell the business by the end of 2016.

RBS said on Monday that plan remained unchanged and declined to comment on whether it had held talks with Sumitomo. Chief Executive Ross McEwan had previously indicated that, while the bank was planning for an initial public offering (IPO), it was open to approaches from potential buyers.

RBS shares rose 1.5 percent on Tuesday.

SMFG and MUFG both declined to comment in Tokyo. The talks with SMFG were first reported by the Wall Street Journal.

Both MUFG, Japan's largest banking group, and SMFG, the No. 3 banking group, have signaled an openness to consider a bid for Citizens, but there are significant hurdles in both cases, according to people with direct knowledge of the situation.

Some executives within SMFG support consideration of a U.S. acquisition that would boost the bank's operations in the world's largest economy, while others are cautious because of the likely price of an acquisition, the people said.

The cautious camp has also argued that SMFG would be better off focusing on building up its Asian operations outside Japan, where the prospect for future growth is better and an acquisition could be an easier strategic fit, people with knowledge of the deliberations said.   Continued...

A sign is seen outside a Royal Bank of Scotland building in central London January 28, 2014. REUTERS/Paul Hackett