Partial sale of CFG stake by RBS
(3 August 2015 – Scotland) The Royal Bank of Scotland Group plc (RBS) announced on 29 July the final pricing of the offering of shares in Citizens Financial Group, Inc. (CFG).
The Offering comprises 86 million shares, or 16.0 percent, of Citizens common stock at a public offering price per share of US$26.00 (A$35.50).
RBS has also granted a 15 percent over-allotment option, under which the underwriters have a 30-day option to purchase an additional 12.9 million shares at the public offering price, less the underwriting discount.
If the underwriters exercise this option in full, the total offering size, including the shares pursuant to the over-allotment option, would comprise 98.9 million shares, or 18.4 percent of Citizens common stock.
Gross proceeds realised by RBS will be US$2.2 billion (US$2.6 billion assuming exercise in full of the over-allotment option) with the cash proceeds being used for general business purposes.
Concurrent to the Offering, Citizens also intends to repurchase a further 9.6 million shares (US$250 million) of CFG common stock from RBS at the Offering price in a directed buy back.
Following the Offering and the directed buy back, RBS will continue to hold up to 23.4 percent of CFG’s shares of common stock (20.9 percent assuming exercise of the entire over-allotment option), which are subject to a 60 day lock-up.
During this period, the lock-up agreement is subject to modification, waiver or cancellation.
RBS will no longer consolidate CFG in its financial statements, recognising an estimated £1.1 billion (A$2.3 billion) gain upon deconsolidation (including £0.9 billion reclassified from equity).
RBS will however continue to fully consolidate Citizens for regulatory reporting purposes as it will retain certain veto rights notwithstanding the reduction in its interest in CFG.
Therefore, RBS will continue to include the Risk-Weighted Assets (RWAs) of CFG in its consolidated RWAs at the current time.
The partial sale is part of RBS’s strategy to fully exit its holding in CFG as part of its European Commission state aid commitments.
Commenting on today's announcement, RBS chief executive, Ross McEwan said:
“The sale of Citizens is an integral part of our capital plan.
“It will help us to create a simpler, stronger and more efficient United Kingdom-focused bank that can better serve the needs of its customers.
“This offering will leave us owning just over 20 percent of Citizens.
“We are now targeting to be able to exit Citizens fully by the end of 2015, a year ahead of the original deadline.”
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