RBS Leads European Banks Higher on Preparations for Citizens IPOGavin Finch
Royal Bank of Scotland Group Plc, Britain’s biggest government-owned lender, led European bank shares higher as it prepared to sell a stake in its Citizens Financial Group Inc. unit through an initial public offering.
The stock climbed 8.4 pence, or 2.4 percent, to 353.4 pence as of 9:49 a.m. in London, the biggest increase in the 40-member Bloomberg Europe Banks and Financial Services Index. The government paid the equivalent of 502 pence a share when it provided a 45.5 billion-pound ($67 billion) bailout of the lender in 2008.
The lender will announce its intention to sell a 15 percent to 25 percent stake in U.S.-based Citizens when it reports earnings on Feb. 28, said a person with knowledge of the plans. The process will probably take two years to complete, said the person, who asked not to be identified because they weren’t authorized to speak publicly on the matter.
“Plans to sell Citizens would probably be taken well by the market as it would potentially enhance RBS’s dividend-paying potential and bring forward the likely privatization timetable,” Michael Helsby, a Bank of America Corp. analyst, wrote in a note to clients this morning.
Chief Executive Stephen Hester said in August that the bank would keep control of Rhode Island-based Citizens because it’s a “core” part of the company that will be more valuable in three years. RBS acquired the consumer and commercial lender in 1988.
The Scottish lender may also announce further cuts at its investment-banking operation to reduce the size of its balance sheet by as much as 30 billion pounds, the Telegraph reported, without saying where it got the information.