Royal Bank of Scotland Group Plc (LON:RBS) is trimming its stake in its US business Citizens, the blue-chip lender has said.
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RBS said on Tuesday it would sell 75 million shares in Citizens in an underwritten public follow-on offering, plus up to 11.25 million more shares in an over-allotment option. The stock closed at $25.94 on Monday in New York. RBS has about $2.5 billion of private-banking assets under management in the South Asian nation, Bloomberg reported citing unidentified source.
Citizens said it has agreed to purchase approximately $250m of its common stock at the offering price from RBS in early August.
The shares on sale represent 16% of Citizens, and RBS’s holding in the bank would come down to 132.7 million shares, or 24.7%, if all the shares are sold. However, the bank will have to continue to include the business for regulatory reporting purposes, and that would delay a boost to RBS’s capital ratios.
“This offering will leave us owning just over 20 per cent of Citizens. We are now targeting to be able to exit Citizens fully by the end of 2015, a year ahead of the original deadline”.
RBS’ India private banking business was not part of that deal.
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Royal Bank of Scotland’s wealth management unit in India is all set for a management buyout as three of its top executives are working with private funds to engineer a takeover. The Financial Times yesterday quoted analysts as forecasting a second-quarter underlying profit of £1.2 billion and an attributable loss of £260 million, following an expected £1.2 billion of restructuring costs, and conduct and litigation charges. Morgan Stanley and Goldman, Sachs & Co are acting as global coordinators and joint book-running managers, and J.P. Morgan and Citigroup are acting as joint book-running managers for this offering.
