Canada's TD Bank plans £7.5bn raid on RBS's US arm

RBS building

Pressure to break up Royal Bank of Scotland is mounting following suggestions that Canada's TD Bank Group is looking to buy its US retail banking arm.

Citizens, which RBS bought in 1988, has one of the largest branch networks in America's prosperous north-eastern states and is thought to be worth $12bn (£7.5bn). Acquiring it could propel a second-tier North American bank into the big league.

With the British government hoping to recoup taxpayer funds sunk into rescuing RBS during the credit crunch, an intention to float a 25% stake in Citizens was announced in February. However, a number of companies are thought to be considering bids, with Toronto-headquartered TD having become more interested since the summer, according to the Sunday Times. US Bankcorp and PNC are also considered likely suitors.

"RBS keeps talking about floating this thing, but I think it is worth more if you sell it," a Wall Street banker advising one bidder told the paper. "It's an awkward size – not really big enough to float and too big to get an auction going with the big guys."

Chancellor George Osborne is expected to reveal within weeks whether RBS is to be broken up as part of the government's asset sale programme, with the business separated into "good" and "bad" banks.

Selling Citizens could generate income more quickly than a stockmarket listing for the government, which owns 82% of RBS. Citizens chief executive Bruce Van Saun, who was sent to America to prepare the bank for a stockmarket listing after helping reshape RBS as its post-collapse finance director, officially took control this month. He has said an initial public offering would happen in 2014, or early 2015 at the latest.

Citizens has £60bn of deposits and 1,400 branches, but Van Saun is hoping to drive up revenues by recruiting hundreds of mortgage and business loan staff.

NM Rothschild was appointed this summer to advise the government on ways to break up RBS, and a sale of Citizens is thought likely to be among the measures proposed.

Powered by article was written by Juliette Garside, for The Guardian on Sunday 13th October 2013 19.26 Europe/London © Guardian News and Media Limited 2010


image: © Mark Ramsey

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