Royal Bank of Scotland Group plc Reveals IPO Pricing For Citizens Financial Group

RBSIt truly is IPO season. Hot on the heels of Jimmy Choo’s (sorry) announcement of its intended flotation on the Footsie (and again…) alongside housebuilder Miller Homes yesterday, among a list of other companies expected to float soon that includes breakdown-service RAC, Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US) this morning released pricing information for Citizens Bank, the US business that it plans to spin off.

Citizens Financial Group stock will be priced at $21.50, with RBS planning on issuing 140 million shares for an intended $3bn, comprising 25% of the business. However, RBS has also agreed a 15% “over-allotment” option, which means that the underwriters have a 30-day option to buy an extra 21 million shares at the offer price. If exercised in full, this option will lead to an extra 3.75% of Citizens being sold, equivalent to over $450k.

However, the IPO price is less than previously anticipated — originally, RBS had hoped to sell the shares between $23 and $25 —  due to doubts surfacing about Citizens’ potential profitability.

Following government pressure to focus on its UK operations, taxpayer-owned RBS plans to sell 100% of its holding in Citizens by 2016, with Ross McEwan, chief executive officer, commenting:

“The sale of Citizens is an integral part of the RBS capital plan. This IPO represents a key step on the path to full divestment. Selling Citizens will significantly improve our capital position and help us to create a strong and secure bank that can continue to fully support the needs of its customers.”

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Sam does not own shares in any company mentioned.