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RBS plans to reduce stake in its US Citizens Financial business

Sharecast

LONDON (ShareCast) - UK tax-payer owned bank Royal Bank of Scotland (LSE: RBS.L - news) on Monday announced through its American bank Citizens Financial (Other OTC: CIWV - news) that it plans to slash its stake in the US business after its initial public offering. State-owned RBS said it will cut its holding to just below 50% through the sale of 115m shares compared to its stake of just over 70% since Citizens (NYSE: CIA - news) ' IPO last September. Morgan Stanley (Xetra: 885836 - news) and Goldman Sachs (NYSE: GS-PB - news) are managing the stake reduction for RBS. The British bank also said it will sell up to another 17.25 million shares in an over-allotment option, equivalent to 24% of Citizen's issued shares.

Citizens joined the New York stock market last September, generating a £2.3bn windfall for RBS. Under the terms of its bailout, RBS is required to sell its entire holding in Citizens by the end of 2016. The group has owned Citizens since 1988, overseeing a rapid pace of expansion via 25 acquisitions throughout New England and into the Midwest of the US.

A £4bn write-down of goodwill related to the Citizens IPO dragged the bank to a full-year loss for 2014. That said, RBS pledged to de-risk its balance sheet further by asset disposals, as policymakers and management prepare the bank for privatisation.