The Royal Bank of Scotland Group has announced the final pricing of its initial public offering for Citizens Financial Group, as it says the sale will “significantly improve” RBS’s capital position.
The sale comprises 25 per cent of Citizens’ common stock at a price per share of $21.50 (£13.11).
RBS has also granted a 15 per cent over-allotment, under which the underwriters have a 30-day option to purchase an additional 21m shares at the initial public offering price, less the underwriting discount to cover over-allotments, if any.
If the underwriters exercise this option in full, the total offer, including the shares pursuant to the over-allotment option, would comprise 161m shares or 28.75 per cent of Citizens common stock.
Gross proceeds realised by RBS will be $3.1m (£1.89m) - or $3.4m (£2.07m) assuming exercise in full of the over-allotment option - with the cash proceeds being used for general business purposes.
The group will continue to hold up to 75 per cent of Citizens’ shares of common stock - 71.25 per cent assuming exercise of all of the over-allotment option - which are subject to a 180-day lock-up. During this period the lock-up agreement is subject to modification, waiver or cancellation.
Trading of Citizens’ common stock will commence on the New York Stock Exchange today (24 September).
Ross McEwan, RBS’ chief executive, said that the sale is an integral part of the RBS capital plan, which represents a key step on the path to full divestment.
“Selling Citizens will significantly improve our capital position and help us to create a strong and secure bank that can continue to fully support the needs of its customers.”
RBS’ first-half pre-tax profits statement mentioned that this year the group saw a $283m (£172m) net profit from the sale of the Illinois branch network of its Citizens’, adding to overall profits almost double those of a year earlier.
