The official overseeing British taxpayers’ stake in Citizens Financial Group parent Royal Bank of Scotland told parliamentarians on Tuesday he’s pushed RBS executives to shrink the bank and take a closer look at its ownership of Citizens.
“I would confirm that among the strategic issues we have discussed with management are the U.S. operations and the investment bank,” U.K. Financial Investments (UKFI) CEO Jim O’Neill told the Parliamentary Commission on Banking Standards, according to a Reuters report. The British government created UKFI in 2008 to manage taxpayers’ bank stakes.
O’Neill’s comments will add further fuel to the newest round of speculation about whether RBS could soon sell off Providence-based Citizens, which it bought in 1988. Another British official, Andrew Bailey of the Financial Services Authority, has also reportedly urged RBS to sell Citizens.
Analysts estimate RBS could get more than $14 billion by selling Citizens, according to Reuters, but executives at the beleaguered bank have resisted the idea.
Sky News’ City of London editor Mark Kleinman, who broke the news last week about the regulators’ push for RBS to sell, reported Tuesday a senior investor argued RBS should not sell Citizens unless it would benefit all the bank’s shareholders. “It is not clear that that would be the case at the moment, this investor said, because of the valuation attributed to Citizens and the impact that a discounted sale would have on RBS’s capital position,” Kleinman wrote.
“The irony is that because Citizens is a valuable franchise, [RBS executives would] like to keep it from a strategic point of view for the revenue it produces,” Martin McGuinn, former CEO of Mellon Financial Corp., told the Pittsburgh paper. “But that value can deliver the capital they sorely need.”
• Related: WSJ: RBS pressured to sell Citizens; TD Bank most likely buyer (Oct. 23)