RBS's Prized American Division 'Citizens' A £10bn Target For Brazilian Bank

RBS's Prized American Division 'Citizens' A Takeover Target For Brazilian Bank

Royal Bank of Scotland's prized American division Citizens was today reported to be a £10 billion target for one of Brazil's biggest banks.

The Rhode Island-based retail bank, which was built up by former RBS chief executive Fred Goodwin and now has more than 1,500 branches across 12 states, is attracting plenty of bid interest, including from Brazil's Itau Unibanco.

With a rumoured price tag of £10 billion, cash raised from any sale could be used by RBS to buy back part of the Government's 80% stake in the bank, realising a windfall for British taxpayers, the Sunday Times said.

Itau, which has a market value of about £45 billion on the back of explosive growth in the Brazilian economy, is keen to buy a deposit-taking bank in America in order to diversify its funding base and grow its reputation overseas.

RBS chief executive Stephen Hester called recent bid talk on Citizens "inaccurate" last week, although today's report said it was an open secret that RBS has no intention of holding on to the bank over the longer term.

While its current plan is to force through a restructuring to boost profitability and sell it in about three years, Itau and Canada's TD Bank are reportedly mulling whether to pull the trigger sooner.

Bank of America Merrill Lynch and JP Morgan Chase would both be expected to show interest in Citizens, along with other foreign banks.

Although home to some of the world's biggest banking groups, America's domestic retail market is fragmented with hundreds of small regional lenders. Citizens has strong positions in the rich states of America's north-east.

RBS posted losses of £1.5 billion for the first six months of the year on Friday, but surprised analysts with the pace at which it is running off the problem loans built up during Mr Goodwin's reign.

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