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RBS offloads shares in US retail bank

RBS offloads shares in US retail bank

Royal Bank of Scotland Group today (26 March) offered up 135m shares in the 13th largest retail bank holding company in the US in a bid to improve capital position.

RBS also granted a 15 per cent over-allotment option, under which the underwriters have a 30-day option to purchase an additional 20.25m shares at the public offering price of $23.75 (£15.87), less the underwriting discount.

If the underwriters exercise this option in full, the total offering size - including the shares pursuant to the over-allotment option - would comprise 155.25m shares, or 28.4 per cent of Citizens common stock.

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The sale is expected to muster $3.2bn (£2.13bn) for RBS, reaching as much as $3.7bn (£2.47bn) if the over-allotment option is taken up.

According to bosses, the cash proceeds will be used for general business purposes.

The partial sale is part of RBS’s strategy to fully exit its holding in Citizens Financial Group by the end of 2016 as part of its European Commission state aid commitments.

It was back in September 2014 that RBS announced the final pricing of its initial public offering for Citizens, in a bid to “significantly improve” the state supported bank’s capital position.

Speaking last year Ross McEwan, chief executive of RBS, said the sale was an integral part of the 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,” he stated.

RBS’ first-half of 2014 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.

emma.hughes@ft.com