RBS set to raise $4 billion from U.S. listing of Citizens

Mon Sep 8, 2014 4:23pm EDT
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By Steve Slater and Neha Dimri

LONDON (Reuters) - State-backed Royal Bank of Scotland (RBS.L: Quote) aims to raise up to $4 billion from the share flotation of its U.S. bank Citizens Financial Group this month, it was announced on Monday, putting it on track to be the biggest U.S. bank share offering this year.

RBS, which is 81 percent owned by the UK government after being rescued in 2008, has come under pressure from UK regulators to improve its capital base and focus on its domestic business, and the bank had already made clear it planned to sell up to a quarter of Citizens this year through an initial public offer (IPO).

RBS said on Monday it would sell 140 million shares in Citizens at between $23 and $25 each in the New York IPO, and could sell a further 21 million shares in an over-allotment option granted to the underwriters of the offer.

Up to 29 percent of the bank will be sold, valuing Citizens at the top end of the price range at $14 billion.

RBS did not set a date for the listing, but it is slated for on or around Sept. 23, a person familiar with the matter said.

RBS said the sale would "significantly improve" its capital position and is "an important milestone" for both RBS and Citizens.

Analysts said once RBS sells at least half of Citizens, probably in the first half of next year, its core capital adequacy ratio should be boosted by 2-3 percentage points, although the initial IPO is unlikely to have much impact.

RBS has previously said it expects to fully sell out of Citizens by the end of 2016.   Continued...

A man walks past a branch of The Royal Bank of Scotland (RBS) in central London August 27, 2014.  REUTERS/Toby Melville