RBS plans to raise $2.2bn with Citizens stake sale

Under Ross McEwan, RBS is slowly selling off its US arm. Picture: Phil Wilkinson

The taxpayer-backed group floated a minority stake in Citizens Financial Group on Wall Street last September, and is now seeking to trim its holding below 25 per cent.

RBS, which is due to report its half-year results tomorrow, said it would be offering 75 million Citizens shares for sale, with a further 11.25 million shares available under a 30-day over-allotment option.

If the over-allotment option is exercised in full, RBS’s stake in Citizens would fall to 24.7 per cent and the sale – which is being managed by Morgan Stanley, Goldman Sachs, JP Morgan and Citigroup – would net about $2.2bn for the bank.

RBS, headed by chief executive Ross McEwan, said Citizens was also planning to buy back a further $250 million of shares from its former parent, which is seeking a full divestment of the firm by the end of 2016.

The European Union ordered RBS to sell off the bank, which focuses its operations on the US eastern seaboard, in return for the Edinburgh-headquartered group’s state aid at the time of the financial crash.

Tomorrow’s results come amid speculation over the timing of the UK government’s first move to sell off shares in RBS.

Chancellor George Osborne has already said he wants to start selling down the taxpayer’s holding by the end of the year and it is thought this plan could begin as soon as September.

The figures are set to show a bottom-line loss of £300m for the first half, according to a number of City analysts.

On an underlying basis, Morgan Stanley expects second-quarter operating profits to dip to £1.4bn, down from £1.63bn in the first quarter, which would also be sharply lower than the £2bn in adjusted earnings reported a year earlier.

RBS, recently hit by a fresh IT glitch that affected some 600,000 payments, slumped to a £446m loss in the first quarter after putting aside cash to cover the forex manipulation scandal, as well as restructuring charges.