RBS Raises $2.6 Billion Selling Citizens Financial Shares

  • Citizens' ties to former parent severed with stock sale
  • Scottish lender was required to dispose of stake after rescue

Royal Bank of Scotland Group Plc, the lender that spun off Citizens Financial Group Inc. last year, raised $2.6 billion with the sale of its last shares in the U.S. regional bank.

RBS sold 110.5 million shares, or a stake of about 21 percent, at $23.38 apiece, Citizens said Friday in a statement. Providence, Rhode Island-based Citizens fell 1.1 percent to $23.85 at 9:40 a.m. in New York trading, and RBS slipped 1.6 percent to 315.60 pence in London.

The Scottish firm was required by European authorities to dispose of the shares by the end of 2016. It withdrew a representative from the U.S. lender’s board as part of the transaction. Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. were underwriters.

“The completion of the sale of Citizens is a critical part of our capital plan,” Royal Bank Chief Executive Officer Ross McEwan said in a separate statement. “A strong capital position is the essential platform on which we will continue to build a simpler, stronger and more efficient U.K.-focused bank.”

Continuing Relationship

RBS raised $3.46 billion in Citizens’ initial public offering, one of 2014’s biggest, selling about 25 percent of the consumer and business bank. Cutting its holding entirely enables the Edinburgh-based lender to boost capital as the U.K. government seeks to return RBS to full private ownership. The sale increases the bank’s common equity Tier 1 capital ratio to 16.2 percent from 12.7 percent, RBS said in its statement.

While now independent of RBS, Citizens will continue to have a commercial relationship with the British lender, Citizens CEO Bruce Van Saun said in a telephone interview. That includes sharing referrals, such as when a U.S. commercial client of Citizens is seeking cash-management services overseas, Van Saun said.

“It’s a testimony to the progress that we’ve made as a company to be able to get out 14 months ahead of schedule," Van Saun said. “That’s a good vote of confidence for the investment community."

Before it's here, it's on the Bloomberg Terminal. LEARN MORE