TribLIVE

| Business

 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Citizens Bank's Scottish parent may sell stake in franchise

Email Newsletters

Click here to sign up for one of our email newsletters.

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

Daily Photo Galleries

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

By John D. Oravecz
Monday, Feb. 25, 2013, 10:39 a.m.
 

Royal Bank of Scotland appears to be taking steps to deal with mounting pressure from the U.K. government to jettison its Citizens Bank franchise in the United States, including the Pittsburgh region's second-largest bank.

On Thursday, RBS will issue its latest financial results and discuss its intention to sell a 15 percent to 25 percent stake in RBS Citizens within two years. It would be a first step in eventually selling off all of RBS Citizen's, according to a report in The Wall Street Journal.

Citizens Bank — the region's second-largest retail bank, with 132 branches — is part of RBS Citizens Financial Group, in Providence, R.I., which is Royal Bank of Scotland's banking unit in the United States.

By selling off a partial stake, RBS can get an idea how much potential buyers are willing to pay, said Nancy A. Bush, an analyst for SNL Financial.

The U.K. government, which owns 81 percent of RBS, has been pressuring the bank for months to sell its U.S. operations, analysts say. The government stake stems from bailing out RBS at a cost of nearly $73 billion in 2008.

RBS CEO Stephen Hester is nearing the end of a five-year restructuring plan, which has shrunk the bank's balance sheet by more than $1 trillion but has still left U.K. taxpayers sitting on a paper loss of $21 billion on its stake.

While the plan may take time to implement, banks or other acquirers may be interested in bidding for RBS Citizens sooner, attracted by its 1,500 retail branches in 12 eastern states and the Midwest.

Analysts have said possible bidders likely will be foreign banks, such as Toronto Dominion or TD, Scotia Bank or BNP Paribas. The only American bank with enough financial heft and without much branch overlap might be U.S. Bancorp, Minneapolis, they said.

The largest U.S. banks — Bank of America, JPMorgan Chase, Wells Fargo and Citibank — are less likely candidates to acquire RBS Citizens, if it were available, analysts say. Not only would they likely run afoul of antitrust regulators' concerns about deposit market concentration, but the federal government does not want “too big to fail” banks to get even bigger.

Bush said large regional banks like U.S. Bancorp or PNC Financial Services Group in Pittsburgh might want to buy RBS Citizens, but regulators would be unlikely to approve such a merger. “They don't want to make a very large institution,” she said. More likely would be a deal with TD Bank, which “wouldn't have this size problem,” she said. A sale to a private equity investor also is possible.

Regional banks such as PNC and U.S. Bank are focusing on the Southeast, she said. In 2011, PNC acquired the American retail banking operation of Royal Bank of Canada with 400 branches. “I don't even know why PNC gets mentioned,” on Citizens, Bush said. A PNC spokesman declined to comment.

RBS Citizens also could be split up geographically to more than one buyer. “It would be difficult, but it can be done,” she said.

Reuters and Bloomberg News contributed to this report. John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or joravecz@tribweb.com.

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Business Headlines

  1. FirstEnergy to build coal waste processing facility in Beaver County
  2. Small business hangs on fate of Export-Import Bank
  3. $2-per-gallon gas expected by year’s end, but not in Western Pa.
  4. Muni bond funds stressed
  5. Jaguar XJ flagship struggles to keep pace
  6. Chevy tweaks its truck remake
  7. 3 vehicles to keep an eye on for 2016
  8. FedEx faces in-depth probe of bid to buy Dutch express company
  9. Low fuel pressure may have easy fix
  10. Insurers: F-150’s aluminum costly to repair
  11. Trib 30 index slips in July; 29 percent drop makes ATI biggest loser