RBS sells 25% stake in Citizens Financial for $3.21B

ROYAL BANK of Scotland Group PLC said investors agreed to pay $3.21 billion in a public offering for a 25 percent stake in its U.S. unit Citizens Financial Group Inc.
 / BLOOMBERG FILE PHOTO/MATTHEW LLOYD
ROYAL BANK of Scotland Group PLC said investors agreed to pay $3.21 billion in a public offering for a 25 percent stake in its U.S. unit Citizens Financial Group Inc. / BLOOMBERG FILE PHOTO/MATTHEW LLOYD

LONDON – Royal Bank of Scotland Group PLC said investors agreed to pay $3.21 billion in a public offering for a 25 percent stake in its U.S. unit Citizens Financial Group Inc.

RBS is selling 135 million shares for $23.75 apiece, Citizens said Wednesday in a statement. The U.K. firm’s stake in Citizens is declining to 45.6 percent from 70.3 percent. The transaction is set to close March 30, and underwriters have a 30-day option to buy an additional 20.25 million shares at the offering price, minus a discount to cover overallotments, according to the statement. That would take RBS’s stake to 41.9 percent.

RBS CEO Ross McEwan, 57, is shrinking the Edinburgh-based lender’s global operations as he seeks to reverse seven straight annual losses and a return to public ownership. The CEO may eliminate as many as 14,000 jobs at the bank’s securities unit as he cuts the number of countries RBS operates in to focus on the domestic market, a person with knowledge of the matter has said.

Selling Citizens “will help us to create a stronger, safer, U.K.-focused bank,” McEwan said in a statement on Thursday. “This successful sale keeps RBS on track to meet our obligations and complete the divestment of Citizens by the end of 2016.”

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RBS must sell all of its shares in Providence, R.I.-based Citizens by the end of next year to meet a European Commission deadline after the bank required a bailout from taxpayers in the financial crisis. McEwan has said he wants to get RBS’s stake below 35 percent this year, which would enable him to remove Citizens from his balance sheet and boost regulatory capital.

RBS raised $3.46 billion in Citizens’s September initial public offering, one of the largest in the U.S. last year.

RBS shares fell 1.6 percent to 346.8 pence at 9:45 a.m. in London trading. They are down 12 percent this year, the most among major U.K. lenders.

Citizens shares have gained 11.6 percent since the IPO.

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