TD Bank shares rise as Citizens takeover seen less likely

Mon Feb 25, 2013 1:14pm EST
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* TD was reported to have been interested in Citizens unit

* RBS may announce partial IPO of bank, source says

* TD shares hit 22-month high

TORONTO, Feb 25 (Reuters) - Shares of Toronto-Dominion Bank rose to their highest level in nearly two years on Monday as reports that Royal Bank of Scotland may launch an IPO for its U.S. Citizens bank eased concerns that TD would buy all or part of the lender.

TD, which has been an aggressive buyer of U.S. retail banking assets over the past decade, held discussions with RBS about buying all or part of Citizens, according to a report last year in the New York Post newspaper.

That put pressure on TD's stock as investors worried about the risk of taking on a large U.S. asset with uncertain growth prospects.

Sources close to the matter told Reuters that RBS may signal this week that it may launch an initial public offering of 20 to 25 percent of Citizens.

"It doesn't eliminate the possibility of a (TD) transaction, but it does seem to at the very least delay the possibility for a while," said Robert Sedran, an analyst at CIBC World Markets.

TD's shares rose as much as 2.2 percent on the Toronto Stock Exchange, hitting their highest level since April 2011.   Continued...