Royal Bank of Scotland (RBS) is seeking to sell its Indian private banking business to Sanctum Wealth Management.
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RBS, which is due to report its half-year results tomorrow, said it would be offering 75 million Citizens shares for sale, with a further 11.25 million shares available under a 30-day over-allotment option. This marks another step towards delivering the strategy to make RBS a stronger, simpler, more sustainable business, more aligned with the needs of our customers in the UK and Western Europe, the bank said.
If all the shares are sold that would represent 16 per cent of Citizens and reduce RBS’s holding to 132.7 million shares, or 24.7 per cent.
It will however continue to fully consolidate Citizens for regulatory reporting purposes, as it retains certain veto rights notwithstanding the reduction in its interest in CFG. The move is expected to give a substantial boost to its capital strength. Britain’s financial regulator will have to approve when that can happen, potentially whenever RBS sells another tranche of shares.
The bank could have to pay anything between £3bn and £9bn to settle the matter, analysts estimate.
RBS also expects Citizens to announce a $250m share buyback targetted at the stake owned by RBS. It has set aside £1.9bn for a settlement, which could come this year.
Citizens intends to buy back US$250 million of the shares being sold.
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Morgan Stanley and Goldman Sachs Group Inc. are coordinating the sale, while RBS, Credit Suisse Group AG, Deutsche Bank AG, UBS Group AG, Bank of America Merrill Lynch, JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo Securities are joint bookrunners, according to the filing.
