LONDON and MADRID – Royal Bank of Scotland Group Plc (RBS), parent of Providence-based Citizens Financial Group, has a new CEO in the wake of the British government’s 20 billion pound ($35 billion) investment in the bank (READ MORE).
Stephen Hester – who takes over for former RBS chief executive Fred Goodwin, as former global banks chief Johnny Cameron also makes his exit and RBS Chairman Tom McKillop prepares to step down at the annual meeting in April – is said to be considering focusing more strongly on the bank’s British base, which could mean he would be open to offers for the company’s U.S. and international assets.
According to Bloomberg News, Hester sold 7.8 billion pounds of assets as CEO of London-based British Land Co., his position previous to his new appointment. Hester said in a conference call yesterday that “there are no sacred cows.”
RBS lost more than half its market value last week, weighed down by 5.9 billion pounds of writedowns and its 14.3 billion euro ($19.3 billion) acquisition of ABN Amro last year. The company’s stock fell 8.4 percent in London trading yesterday to close at 65.7 pence, but rebounded along with the rest of the market in U.S. trading to end the day at $1.93 per share, an increase of 55.65 percent.
Hester did not name possible buyers for RBS assets, according to Bloomberg News, but Banco Santander SA, Europe’s second-largest lender by market value, may be interested in the Providence-based Citizens Financial Group Inc., said Andrea Williams, who manages 1.5 billion pounds ($2.6 billion) at Royal London Asset Management.
“It would be so natural for [Santander] to buy Citizens, especially if they’re going to buy Sovereign [Bancorp Inc. (SOV)],” Giovanni Carriere, an analyst at Execution Ltd. in London told Bloomberg News. But a Santander spokesman declined to comment on the company’s potential interest in RBS assets.
Meanwhile, however, Banco Santander has agreed to acquire Sovereign, the largest U.S. savings and loan following the collapse of Washington Mutual Inc., in a stock swap valued at $1.9 billion. The news came only hours after Sovereign announced that “it is engaged in advanced discussions with Banco Santander S.A regarding a possible business combination.”
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Sovereign shareholders are to receive 0.2924 Banco Santander American Depository Shares (ADS) for each share they hold, the equivalent of about $3.81 per share, according to a company statement.
“Buying Sovereign shows they have the balance-sheet strength to be able to pick up assets they want at a reasonable price,” Williams told Bloomberg News.
The Philadelphia-based Sovereign tonight “pre-announced” a third-quarter net loss of $982 million that included a $575 million impairment charge on holdings of government-sponsored entities Fannie Mae and Freddie Mac (READ MORE), as well as a $602 million loss on the sale of collateralized debt obligations (CDOs).
In the fourth quarter of 2007, Santander recorded a 737 million euro ($1 billion) charge on its investment in Sovereign.
“It has been apparent for some time that Santander may have to act sooner rather than later in order to protest its investment in Sovereign,” Joseph Fenech and Casey Orr wrote in an Oct. 13 note to investors for Sandler O’Neill & Partners LP.
