RBS cuts its Citizens stake in robust take up of shares

RBS has cut its stake in US regional bank Citizens Financial from 41% to to 20% via an upsized $2.5bio secondary stock sale, as reported by IFR.  The 86m shares were sold at a narrow 0.7% discount to market and included a 15% exercise by underwriters of a greenshoe feature.  With this impressive execution by its bankers, RBS now expects to fully exit its holding by the end of the year. Once completed, the full sell down will improve the 12% CT1 ratio at the end of the quarter to over 15.5% or more, assuming no more nasties.  All of this of course underpins the UK Government's desire to fully exit its holdings of RBS by 2020.  

On top of the Citizens disposals, IFR is also reporting this week that RBS expects to accelerate disposals of its wholesale and investment banking activities in 25 countries!  RBS announced plans last year to cut RWAs by £75billion from the then £160billion level.  With recent reductions, RWAs fell close to the £85billion target in Q2 at RBS.   With recent announcements by HSBC and others to also cut their overseas footprint, one can really see the impact of capital and leverage rules, the need to raise capital and risk appetite statements are having upon European banks today and the material need to re-work business and capital allocation strategies.  

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