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4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Royal Bank of Scotland Group plc    RBS   GB00B7T77214

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Royal Bank of Scotland Group plc : RBS Plans to Float Stake in U.S. Business - Sources

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02/23/2013 | 12:34pm CET
   By Max Colchester 
 

LONDON--Royal Bank of Scotland Group PLC (RBS, RBS.LN) is set to present plans next week to float up to a quarter of its U.S. retail business, according to people briefed on the matter.

RBS Chief Executive Stephen Hester will present the lender's board with a plan to list between 20% and 25% of RBS Citizens Financial Group Inc. in the next two years, one person said. Another person said that the size of the stake had not been finalised yet.

The move follows pressure from U.K. regulators for the 81% British government-owned bank to shore up its balance sheet and raise extra capital. RBS has yet to hire advisors for the deal. Analysts have estimated Citizens's value at around GBP6.6 billion.

Citizens has nearly 1500 branches in the U.S. and is present in 13 states. In the first nine months of 2012 RBS's U.S. retail and commercial division generated revenues of GBP2.35 billion.

The decision to float a part of Citizens follows months of fractious negotiations with U.K. regulators. Back in October a director at the Financial Services Authority wrote to Mr. Hester saying that RBS should consider strengthening its capital base by selling off Citizens.

Mr. Hester seemed set against the idea stating that Citizens was a lucrative part of the business and is in the midst of restructuring. He also argued that finding a buyer willing to pay a fair price for the business would be complicated.

Floating part of Citizens would allow more transparency on the value of the U.S. bank, the person briefed on the matter said. It also removes any immediate pressure for the company to dispose of the business. RBS is set to post a net loss when it presents full year result next week. This is expected to further ratchet up pressure on RBS's management to accelerate the restructuring of the bank which was bailed out by the U.K. taxpayer at the height of the financial crisis.

Write to Max Colchester at max.colchester@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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Financials ( GBP)
Sales 2016 11 891 M
EBIT 2016 2 714 M
Net income 2016 -3 364 M
Debt 2016 -
Yield 2016 -
P/E ratio 2016 -
P/E ratio 2017
Capi. / Sales 2016 2,20x
Capi. / Sales 2017 2,17x
Capitalization 26 117 M
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Mean consensus UNDERPERFORM
Number of Analysts 23
Average target price 1,97  GBP
Spread / Average Target -11%
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Ross Maxwell McEwan Group Chief Executive Officer & Executive Director
Howard John Davies Chairman
Mark Bailie Chief Operating Officer
Ewen Stevenson Chief Financial Officer & Executive Director
Aileen N. Taylor Director & Chief Governance Officer
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