RBS eyeing sale of Indian private banking business

Royal Bank of Scotland has announced plans to sell a $2bn (£1.3bn) stake in its US subsidiary Citizens Financial Group as part of its continued efforts to rid itself of non-core assets.

RBS, headed by chief executive Ross McEwan, said Citizens was also planning to buy back a further $250 million of shares from its former parent, which is seeking a full divestment of the firm by the end of 2016. But the bank will have to continue to include the business for regulatory reporting purposes, which will delay a boost to RBS’s capital ratios.

The British government rescued RBS after the 2008 financial crisis and holds 80 percent ownership.

If all the shares are sold that would represent 16 percent of Citizens and reduce RBS’s holding to 132.7 million shares, or 24.7 percent.

The sale is understood to have been called off as Abu Dhabi Commercial Bank asked at a late stage to select which of RBS’s customers it would take on, according to one of the sources.

In a stock exchange announcement today (28 July), RBS said it is offering a further 75m shares of Citizens’ common stock, equivalent to 14 per cent of CFG’s issued and outstanding common stock, excluding an over-allotment option. If demand for the stock is high, RBS will put an extra 11.25m shares up for sale, worth £292.5m at the current market price.

RBS sold a first slice of Citizens in an initial public offering in September and sold another chunk of shares in March.

The move will cut RBS’s stake in Citizens to just under a quarter, allowing it to stop consolidating the Rhode Island-based lender in its accounts.

Morgan Stanley and Goldman Sachs are global coordinators and joint book-runners for the sale, and JPMorgan and Citigroup are joint book-runners.