28th Jul 2015 12:25
LONDON (Alliance News) - Royal Bank of Scotland Group PLC Tuesday said it is planning to sell another chunk of shares in Citizens Financial Group Inc, the US retail bank that it floated on the New York Stock Exchange in 2014, in a move that could cut the UK state-backed lender's stake to 24.7% of Citizens' shares.
RBS is selling Citizens as it looks to continue its restructuring and focus on lending activities in the UK. The bank said it is offering 75 million shares in Citizens, equivalent to a 14.0% stake. A further 11.3 million shares will be made available under a 30 day over-allotment option. If RBS sells all of those shares, it will be left with a 24.7% stake, the bank said in a statement, from about 40% currently.
The statement also said that it is intended that Citizens will repurchase a further USD250 million in shares from RBS at the offering price in a directed buy back.
The UK government, which still owns roughly 80% of RBS following a GBP45.5 billion bailout during the financial crisis of 2007-09, is looking to begin returning the the bank to private hands. The UK government could raise up to GBP2 billion by selling part of its shareholding in RBS in the current fiscal year, according to UK Financial Investments, the body responsible for managing the taxpayer's holdings in bailed-out banks.
The state aid received during the crisis means RBS must fully exit its holding in Citizens by the end of 2016.
RBS will no longer consolidate Citizens in its financial statements once the sale completes, meaning the remaining stake will be classed as an associated undertaking.
However, RBS said it will fully consolidate Citizens for regulatory reporting purposes as it will "retain certain veto rights notwithstanding the reduction in its interest" in the US banking company.
"Therefore, Royal Bank of Scotland Group will continue to include the risk-weighted assets of Citizens Financial Group in its consolidated risk-weighted assets at the current time," RBS said.
RBS shares were up 1.1% at 351.00 pence on Tuesday afternoon.
By Samuel Agini; [email protected]; @samuelagini
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