State-backed Royal Bank of Scotland intends to sell up to $2.2 billion shares in US bank Citizens, which would cut its stake in that business to less than one quarter.
RBS said it would sell 75 million Citizens shares in a public offer, plus an option to sell up to another 11.25 million.
If all the shares are sold that would represent 16 per cent of Citizens and reduce RBS's holding to 132.7 million shares, or 24.7 per cent.
RBS bought Citizens, based in Providence, Rhode Island, in 1988 and expanded it with 25 acquisitions, including the $10.5bn purchase of Charter One in 2004.
RBS, 78 per cent owned by the British government after being rescued in the 2008 financial crisis, has been reducing its holding in Citizens as part of a retreat to its retail and commercial banking business in Britain.
RBS, run by New Zealand born chief executive Ross McEwan, said it would no longer consolidate its Citizens stake in its accounts following the latest sale. But the bank will have to continue to include the business for regulatory reporting purposes, which will delay a boost to RBS's capital ratios.
It is expected RBS will get a boost of between 200 and 300 basis points to its core capital ratio once Citizens is fully stripped out. Britain's financial regulator will have to approve when that can happen, potentially whenever RBS sells another tranche of shares.
That could be valuable to RBS, as its capital could be weakened when it settles claims it misled investors in US mortgage-backed securities.
The bank could have to pay anything between £3bn and £9bn to settle the matter, analysts estimate. It has set aside £1.9bn for a settlement, which could come this year.
RBS sold a first slice of Citizens in an initial public offering in September and sold another chunk of shares in March.
Citizens intends to buy back $250 million of the shares being sold.
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