Citizens Financial Group may be sold
British regulators have stepped up pressure on the Royal Bank of Scotland Group PLC to sell off assets in the wake of its massive government bailout, and the bank could be forced to sell Citizens Financial Group Inc. here in the United States.
The Scottish banking giant, which is 70 percent owned by the British government, is expected to announce its forced divestitures Tuesday, according to UK press reports. In a statement, the company said its decisions "will include some divestments not initially contemplated."
Citizens Financial, based in Providence, is New England's second-largest banking institution. It has $153 billion in assets and employs about 24,000 people. The Royal Bank's chief executive, Stephen Hester, has said publicly that he is fighting to keep Citizens, which it considers part of its core franchise, as it negotiates with financial regulators.
"It remains RBS’s goal that any required divestments do not threaten its recovery plan which is already underway,'' the company said in a statement. A spokeswoman for the Royal Bank declined to comment. Treasury officials in Britain could not be reached.
The Times of London reported yesterday that the Royal Bank of Scotland may have to sell its Churchill and Direct Line insurance operations, a large part of its investment bank, and Citizens, its US banking arm. "RBS is now trying to put a brave face on the situation — at one stage last week it was also being ordered to sell its Citizens Bank business in the US," the Times reported.
RBS said it was also close to agreement with the Treasury about terms for insuring $530 billion of troubled assets, a step which will increase the government's stake in the bank from the current 70 percent to more than 80 percent.
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