Royal Bank of Scotland has been forced to cut the price for the flotation of its Citizens Bank business after investors expressed doubts about the US bank’s potential profitability.
The UK taxpayer-owned bank had originally hoped to sell Citizens for between $23 (£14) and $25 a share but the initial public offering (IPO) was priced at $21.50 a share in New York.
The sale values Citizens at about $12bn, around $2bn less than the top price RBS had hoped for. RBS is initially selling 25% of Citizens, raising $3bn, and intends to offload the bank entirely by 2016.
If the underwriters take up an option to buy 15% more shares, RBS would raise $3.5bn and sell 28.75% of Citizens.RBS, which is 81% owned by UK taxpayers after a 2008 bailout, is selling what was one of its most prized businesses because the government and regulators want it to focus on lending to UK customers and increase capital strength.
The decision to sell was taken by Stephen Hester, RBS chief executive until last year, and is being carried out by his successor, Ross McEwan. In a statement, McEwan said: “The sale of Citizens is an integral part of the RBS capital plan.
This IPO 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 shares fell 0.6% to 356p in early trading. RBS bought the Rhode Island-based bank in 1988 as a small outpost in the world’s biggest economy.
After buying NatWest in 2000, RBS went on an acquisition spree to turn Citizens into one of the top 10 banks in the US.
Citizens’ overpriced takeover of Charter One in order to expand into the Midwest in 2004 was an early sign of former RBS chief executive Fred Goodwin’s overambitious empire building. Shares of Citizens are expected to start trading on Wednesday.
The IPO is underwritten by Morgan Stanley and Goldman Sachs. RBS is also considering selling the overseas operations of its Coutts private bank, which boasts the Queen as a customer. Julius Baer, the Swiss bank, has said it would be interested in buying Coutts International.
theguardian.com
The UK taxpayer-owned bank had originally hoped to sell Citizens for between $23 (£14) and $25 a share but the initial public offering (IPO) was priced at $21.50 a share in New York.
The sale values Citizens at about $12bn, around $2bn less than the top price RBS had hoped for. RBS is initially selling 25% of Citizens, raising $3bn, and intends to offload the bank entirely by 2016.
If the underwriters take up an option to buy 15% more shares, RBS would raise $3.5bn and sell 28.75% of Citizens.RBS, which is 81% owned by UK taxpayers after a 2008 bailout, is selling what was one of its most prized businesses because the government and regulators want it to focus on lending to UK customers and increase capital strength.
The decision to sell was taken by Stephen Hester, RBS chief executive until last year, and is being carried out by his successor, Ross McEwan. In a statement, McEwan said: “The sale of Citizens is an integral part of the RBS capital plan.
This IPO 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 shares fell 0.6% to 356p in early trading. RBS bought the Rhode Island-based bank in 1988 as a small outpost in the world’s biggest economy.
After buying NatWest in 2000, RBS went on an acquisition spree to turn Citizens into one of the top 10 banks in the US.
Citizens’ overpriced takeover of Charter One in order to expand into the Midwest in 2004 was an early sign of former RBS chief executive Fred Goodwin’s overambitious empire building. Shares of Citizens are expected to start trading on Wednesday.
The IPO is underwritten by Morgan Stanley and Goldman Sachs. RBS is also considering selling the overseas operations of its Coutts private bank, which boasts the Queen as a customer. Julius Baer, the Swiss bank, has said it would be interested in buying Coutts International.
theguardian.com
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