RBS' $12bn Citizens IPO fails to tempt investors

The taxpayer-owned bank is finally starting to offload its US business, but investors aren't so sure.

by Rachel Savage
Last Updated: 20 Nov 2014

Royal Bank of Scotland has finally started the process of selling Citizens Financial Group, the US’ 13th largest bank. But it was forced to cut the price of the IPO, after investors weren’t sold on the company’s financial prospects.

The 140 million shares, around 25% of the bank, were priced at $21.50 (£13) last night, valuing it at $12bn. A tad embarrassing for RBS, which had earlier offered shares to investors at $23-$25.

It still means UK taxpayers will get just over $3bn, but the last minute share price cut means $500m less will be funnelled back across the Atlantic. Billions were pumped in to save Citizens at the height of the financial crisis, but US regulators then rejected multiple RBS requests to bring the money back to the UK, despite it returning to profit.

It hasn’t been profitable recently, though - would-be investors were put off by the $3.4bn net loss the 1,370 branch bank made last year, on top of a $4.4bn goodwill writedown.

Citizens’ IPO is, nonetheless, the biggest US bank float for 15 years. But the litmus test will come later today, when shares start trading in New York.

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