The parent company of Citizens Bank, which has more than 40 branches locally, is on its way to becoming an independent company by the end of 2016.
The Royal Bank of Scotland was already expected to divest itself of Rhode Island-based Citizens Financial Group, Citizens Bank’s parent. But RBS said Friday it is accelerating the process and shared a specific timetable. The divestiture begins with a partial initial public offering in the second half of 2014.
“It is a good business, with the potential to build profitability and its own shareholder base, but it’s not one that is an essential element of our strategy,” said Ross McEwan, RBS’s chief executive officer, in a statement.
Citizens has 43 branches in Erie and Niagara counties. It ranked No. 4 among banks in the Buffalo Niagara region in deposit market share as of June 30, at nearly 5 percent, according to Federal Deposit Insurance Corp. data.
RBS is expected to sell 20 percent to 25 percent of Citizens Financial in the IPO. The remainder will be sold off through secondary offerings over 2015 and 2016.
“We’re excited about moving forward into the next phase of our evolution as a company,” Bruce Van Saun, Citizens Financial Group’s chairman and CEO, said in a statement. “We have a clear plan that will facilitate our becoming an independent, standalone bank within three years. We have benefited from our long association with RBS, and will continue to maintain a strong business relationship with RBS throughout this period and beyond.”
RBS’s plan to divest itself of Citizens stems from broader issues RBS is coping with at home. The British government owns 82 percent of RBS, the result of a rescue during the 2008 financial crisis. RBS is facing pressure to get money back to taxpayers, and also wants to concentrate on the United Kingdom market.
RBS acquired Citizens in 1988. Citizens entered the Western New York market in 2004 through acquiring Cleveland-based Charter One Financial; the local Charter One branches switched to the Citizens name in 2005.