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RBS Says Sticking With IPO Plan For Citizens

Stocks in this article: RBS

LONDON (The Deal) -- Royal Bank of Scotland Group (RBS) on Tuesday attempted to play down rumors of a possible sale of RBS Citizens Financial Group to either of two competing Japanese banks, repeating instead its plan to float the company later this year.

"We announced in November 2013 that we would accelerate the [initial public offering] of Citizens, aiming to start the process in the second half of 2014 and to fully sell the business by the end of 2016. That is our plan," the bank said in an e-mailed statement.

The statement came in response to media reports on Monday that Royal Bank was in exclusive talks about selling the Providence, R.I.-based business to Sumitomo Mitsui Financial Group. Reports also said that Mitsubishi UFJ Financial Group had considered a bid.

The talks with Sumitomo were first reported in the Wall Street Journal.

The firm tone of the statement appeared in contrast to previous remarks by Royal Bank chief executive Ross McEwan. McEwan, who took over from Stephen Hester last fall, has previously indicated that while the bank was still planning an IPO, it would be open to approaches from potential buyers.

Royal Bank has been under pressure from the British government -- its 81% shareholder -- to sell Citizens at the earliest opportunity and use the money to shore up its capital position. He had been disinclined to sell the U.S. operation at all and only reluctantly agreed to an IPO. His successor was expected to be more flexible.

Royal Bank paid $440 million for Citizens in 1988 and built the institution into one of the largest regional banks in the U.S., notably through the $10 billion purchase of Charter One Financial Inc. in 2004. But in recent years, the Edinburgh parent has been restructuring Citizens to reduce costs.

In January, it disposed of its Chicago-area Charter One branches, small business operations and select middle market relationships to U.S. Bank NA, part of U.S. Bancorp.

Sumitomo and Mitsubishi UFJ are reportedly thought to be keen to extend their U.S. operations, although not at any price.

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