Citizens Bank initial share price is lower than expected
Providence-based Citizens Bank will be publicly traded for the first time Wednesday morning and has priced its stock at $21.50, lower than expected.
The bank, which is spinning off from its beleaguered parent, Royal Bank of Scotland, disclosed the price late Tuesday. The bank said in an earlier filing it expected to price its IPO at between $23 to $25 a share, already a discount compared to regional banks of similar size.
Citizens is raising $3 billion from this offering, as Royal Bank of Scotland sells about 25 percent of its shares in the US bank. The Royal plans to sell its entire stake by 2016.
The proceeds are expected to go to the Royal Bank of Scotland, which needs money to help repay British taxpayers for a $70 billion bailout during the global financial crisis of a few years ago.
Citizens is the 13th largest bank in the country, with 1,230 branches, but it has underperformed in recent years. Citizens has been hampered by the problems of its parent and Citizens’s ill-timed purchase of Charter One, a midwestern bank, in 2004, said Terry McEvoy, an analyst with Sterne Agee, an Alabama investment bank. Earlier this year, Citizens sold the Charter One franchise in Chicago.
Citizens said they expect to improve the bank’s performance by expanding commercial lending and wealth management and by cutting costs.