RBS said to take 4 billion pound writedown on Citizens unit

ROYAL BANK OF SCOTLAND is intending to write down 4 billion of the goodwill on its balance sheet from its purchase of Citizens Bank, according to published reports. / BLOOMBERG FILE PHOTO/MATTHEW LLOYD
ROYAL BANK OF SCOTLAND is intending to write down 4 billion of the goodwill on its balance sheet from its purchase of Citizens Bank, according to published reports. / BLOOMBERG FILE PHOTO/MATTHEW LLOYD

LONDON – Royal Bank of Scotland Group PLC will write down the value of its U.S. unit, Citizens Financial Group Inc., by about 4 billion pounds ($6.2 billion) next week, a person familiar with the matter said.

RBS is taking the charge a year earlier than analysts expected, and the decision will reduce the bank’s annual profit, said the person, who asked not to be identified because the information isn’t public. The goodwill writedown, to be taken on Feb. 26 when the bank reports full-year earnings, is an accounting matter and won’t affect capital, the person said.

RBS raised $3.46 billion in Citizens’s September initial public offering, the largest ever for a bank in the U.S., selling about 25 percent of the consumer and business lender. It plans to sell the rest of its stake this year, Citizens CEO Bruce Van Saun said Jan. 30. Disposing of the business will boost RBS’s capital and aid the U.K. government’s plan to reduce its 80 percent holding.

RBS, Britain’s largest government-owned lender, valued Citizens at 11.6 billion pounds with 4.3 billion pounds of goodwill, according to RBS’s Pillar 3 report for 2013.

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A spokeswoman for RBS declined to comment on the goodwill writedown. Lauren DiGeronimo, a spokeswoman for Citizens Financial, didn’t immediately respond to phone calls and emails seeking comment. Reuters reported the writedown earlier Friday.

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