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RBS looks to sell further stake in US retail bank

RBS looks to sell further stake in US retail bank

The Royal Bank of Scotland Group has announced that intends to sell part of its shareholding in Citizens Financial Group in an underwritten public follow-on offering.

Back in March, RBS offered up 135m shares in Citizens to help improve its capital position. Citizen is the 13th largest retail bank holding company in the US.

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. A further 11.25m shares will be made available under a 30 day over-allotment option.

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If all the CFG shares are sold, assuming no exercise of the over-allotment option, RBS’s remaining stake would comprise 144m shares, equivalent to 26.8 per cent of CFG’s issued and outstanding common stock. If the over-allotment option is exercised in full, RBS’s remaining stake would be 132.7m shares or 24.7 per cent of CFG’s issued and outstanding common stock.

Following completion, RBS will no longer consolidate CFG in its financial statements and it will account for its remaining interest as an associated undertaking.

It will however continue to fully consolidate Citizens for regulatory reporting purposes, as it retains certain veto rights notwithstanding the reduction in its interest in CFG.

Citizens also aims to repurchase a further $250m (£160m) of CFG common stock from RBS at the offering price in a directed buy back.

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

Morgan Stanley and Goldman, Sachs are acting as global coordinators and joint book-running managers, while JPMorgan and Citigroup are acting as joint book-running managers for this offering.

peter.walker@ft.com