May 13 (Bloomberg) -- Citizens Financial Group Inc., the U.S. consumer bank subsidiary of Royal Bank of Scotland Group Plc, filed a draft prospectus yesterday for an initial public offering in New York in the fourth quarter.
The company will raise a nominal $100 million, though the figure is a placeholder used to calculate fees, the Edinburgh-based company said in an S-1 registration filing. A formal prospectus with the offering size and range will be published at a later date.
“They are going to sell down about 20 percent to 25 percent this year, probably bring it to below 50 percent next year and totally exit it the year after,” Shailesh Raikundlia, an analyst at Espirito Santo Investment Bank with a neutral rating on RBS, said by telephone. “They are trying to find a buyer, but it’s been on the block for some time.”
Citizens traces its history to 1828 as High Street Bank, adopting its current name in 1871. The Providence, Rhode Island-based bank, with $122.2 billion in assets, has been an RBS subsidiary since 1988 and operates branches in the Northeast and Midwest. Citizens posted revenue of $4.69 billion last year, a decline of 4.2 percent from 2012, the filing showed.
“The divestment of Citizens is a key component of our plan to continue to strengthen RBS’s capital position,” RBS Chief Executive Officer Ross McEwan said in a statement.
Citizens has a value of about 8 billion pounds ($13.5 billion), Raikundlia estimated. The value may be as much as 9.2 billion pounds, Mark Phin, an analyst at Keefe, Bruyette & Woods, wrote in a note to investors this month.
RBS gained 0.9 percent to 329 pence in London trading, narrowing its decline this year to 2.7 percent.
RBS had been open to takeover offers for Citizens, holding talks with potential buyers that didn’t yield anything substantial, Bruce Van Saun, CEO of the unit, said in January. Citizens agreed to sell its Chicago branches to U.S. Bancorp for about $315 million in January.
Van Saun may get $12.28 million if he leaves because the bank has been sold, according to the documents.
RBS had its capital plan for Citizens rejected by the Federal Reserve less than two months ago as the U.S. regulator cited flaws in the unit’s internal processes. The British government, which owns 80 percent of RBS, has been pushing the lender to focus on U.K. consumer and corporate banking as it tries to recoup some of the 45.5 billion pounds spent bailing out the company five years ago.
Morgan Stanley and Goldman Sachs Group Inc. are managing the offering. Citizens didn’t indicate whether it plans to list on the New York Stock Exchange or Nasdaq Stock Market.
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