RBS plans partial float of US unit - Financial Times

Royal Bank of Scotland is poised to announce a plan to float part of its US business as the state-backed lender looks for ways to raise capital and restructure ahead of eventual reprivatisation. The bank, which is 82 per cent taxpayer-owned, will announce its intention to float between 15 to 25 per cent of Citizens, its large US retail subsidiary, when it reports full-year results on Thursday. The partial float, which is proposed to take place in two years' time, could raise £1.5bn to £2bn for RBS given the current £8bn book value of the business. Like other British banks RBS needs to find new capital after the Bank of England's influential Financial Policy Committee suggested last November that lenders will have to raise £20bn-£50bn of new capital or restructure their businesses. With equity issuance politically impossible RBS has narrower options than its peers. It is expected to signal it may be more open to the idea of contingent convertible debt, or Cocos, which convert to equity once a pre-agreed financial trigger is breached. However it is not expected to announce details of any planned issuance. Floating a portion of Citizens, rather than an outright sale, would also give RBS a clearer idea of the value of the whole business and increase its focus on its domestic market. RBS declined to comment. The bank has come under recent pressure to signal how ready it is to be reprivatised with David Cameron recently calling on Stephen Hester, chief executive, to "accelerate" reforms at the bank, which received a £45bn state bailout at the height of the financial crisis. It is part of the way through one of the UK's biggest corporate restructurings, involving a rundown of non-core assets and paring back of its investment banking operations. The bonus pool for 2012 is likely to be in range of £250m to £300m, down from £390m for the previous year, a decrease reflecting in part the decision to find a portion of the bank's £390m settlement with UK and US regulators for attempting to manipulate Libor from the pot. RBS is also expected to increase its provision to compensate small businesses who were mis-sold interest rate hedging products, after a pilot study by the Financial Services Authority found that more than 90 per cent of sales did not meet regulatory requirements. RBS has set aside £50m to cover redress costs for the product, designed to protect companies from interest rate rises by fixing rates on their loans, but this is expected to rise to at least £500m. Last month the bank said, following the FSA's announcement, that it would "meaningfully increase its provision." Copyright The Financial Times Limited 2013. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGn_AXnthEyspM86ZzbKmL-S-sNmA&url=http://www.ft.com/cms/s/0/1188f9c2-7e92-11e2-9080-00144feabdc0.html

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