RBS planning to raise up to US$4b from US unit's IPO

[LONDON] State-backed Royal Bank of Scotland plans to raise up to US$4 billion from the share flotation of its US bank Citizens Financial Group this month, putting it on track to be the biggest US share offering by a bank this year. RBS, which is 81 per cent owned by the UK government after being bailed out in 2008, has come under pressure from UK regulators to improve its capital base and focus on its core domestic business, and the bank had already made clear it planned to sell up to a quarter of Citizens this year through an initial public offer (IPO).

RBS said on Monday it would sell 140 million shares in Citizens at between US$23 and US$25 each in the IPO, and could sell a further 21 million shares in the sale. Up to 29 per cent of the bank will be sold. At the top end of the range, Citizens will be valued at US$14 billion, which is at the upper end of a US$9 billion to US$15 billion range estimated by analysts.

All the shares in the offering are being sold by RBS, which said the sale will "significantly improve" its capital and is "an important milestone" for both RBS and Citizens. It did not set a date for the listing but industry sources have said it could occur at the end of this month. Analysts said that the separation of Citizens from RBS, expected next year, should boost the UK bank's core capital adequacy ratio by two to three percentage points, although the initial IPO is unlikely to have much impact. - Reuters