RBS agrees to sell 25% stake in Citizens for $3.21bn

Royal Bank of Scotland Group said investors agreed to pay $3.21bn in a public offering for a 25% stake in its US unit Citizens Financial Group.Bloomberg/LondonRoyal Bank of Scotland Group said investors agreed to pay $3.21bn in a public offering for a 25% stake in its US unit Citizens Financial Group.RBS is selling 135mn shares for $23.75 apiece, Citizens said Wednesday in a statement. The UK firm’s stake in Citizens is declining to 45.6% from 70.3%. The transaction is set to close March 30, and underwriters have a 30-day option to buy an additional 20.25mn shares at the offering price, minus a discount to cover overallotments, according to the statement. That would take RBS’s stake to 41.9%.RBS Chief Executive Officer Ross McEwan, 57, is shrinking the Edinburgh-based lender’s global operations as he seeks to reverse seven straight annual losses and a return to public ownership. The CEO may eliminate as many as 14,000 jobs at the bank’s securities unit as he cuts the number of countries RBS operates in to focus on the domestic market, a person with knowledge of the matter has said.Selling Citizens “will help us to create a stronger, safer, UK-focused bank,” McEwan said in a statement yesterday. “This successful sale keeps RBS on track to meet our obligations and complete the divestment of Citizens by the end of 2016.”RBS must sell all of its shares in Providence, Rhode Island-based Citizens by the end of next year to meet a European Commission deadline after the bank required a bailout from taxpayers in the financial crisis. McEwan has said he wants to get RBS’s stake below 35% this year, which would enable him to remove Citizens from his balance sheet and boost regulatory capital.RBS raised $3.46bn in Citizens’s September initial public offering, one of the largest in the US last year.RBS shares fell 1.6% to 346.8 pence at 9:45 am in London trading. They are down 12% this year, the most among major UK lenders.Citizens shares have gained 11.6% since the IPO.