RBS Gets Ready for Citizens Float
You may remember earlier this year, in June Lloyds floated the TSB side of the bank and thus became known as just Lloyds instead of Lloyds TSB. This equated to the bank selling 38.5% of the group at a cost of 260 pence (£2.60) per share.
Well, Royal Bank of Scotland is gearing up to go a similar way to Lloyds. They’re looking at floating their US business at a valuation thought to be up to $14bn (£8.5bn).
The top dogs at RBS’ US branch are set to receive a hefty pay-out when their business receives what is expected to be a $9m when the sale starts this week.
The floating of Citizen’s Financial Group, which is expected to get underway this week, will net the bank a cool $4bn (£2.4bn) which will be a welcome boost to their capital position.
Bruce Van Saun, the former RBS finance director who was made the chief executive of Citizens last year is also set to receive a big pay out as part of IPO related compensation and there is also four other executives who are set to receive their share of $4.1m.
The way that these bonuses/payments will be shared out is a mix of a convertible bond and RBS shares. The RBS shares will also be able to be converted in to Citizens shares when the company floats, allowing the execs to sell their shares.
So, you may be wondering what this means for us back over here in the UK. Well, the bank have announced that they plan on selling off 161m shares in Citizens which is a 29% stake and they plan on selling the shares off between $23 and $25 per share.
You may already be aware that the bank is already 80% owned by the taxpayer and they’re planning on selling off Citizens by the end of 2016, by which time it is expected that the Government will have begun selling off its own stake in RBS.
According to 69% of leading institutional investors, they believe that the treasury will begin selling off shares in the bank next year. This alludes to the fact that the economy is getting back to a healthy state and the treasury obviously believes that it can make some money from the sale of the bank’s shares.
This still doesn’t take away from the things that are going on right in our own back yard though. For example, RBS being fined £15m for false mortgage advice, or what about the likes of Lloyds and HSBC to name but a few adding to their PPI bill which in a space of 6 weeks, just earlier this month led to the total PPI bill increasing by a staggering £3 billion.
There’s much still going wrong over with the banks in this country. The next big mis-selling scandal is on the rise at the minute too. Packaged bank account claims hit an estimated 17,000 complaints in 2014 but that has significantly increased.