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RBS to speed up Citizen's sale, create £38B bad bank; stock tumbles

  • "We now have a shared vision for the bank that includes the board, our principal prudential regulator and the U.K. Government," says RBS CEO Ross McEwan, granting government wishes with the creation of an internal "bad bank" to hold £38B in sketchy assets, including bad loans from RBS' Ulster Bank unit. RBS plans to sell or let run off between 55-70% of the assets over the next two years.
  • The reorganization will cost the bank a writedown of £4B-£4.5B in Q4 and a short-term slip in its capital ratio.
  • Also at the behest of the government, management pledges to accelerate the sale of its U.S. unit - Citizens Financial. A partial listing is set to take place in 2014 H2 and a full exit by 2016. A buyer (TD Bank?) could theoretically step in ahead of an IPO.
  • Shares -6% in London action.
  • Previous: Q3 results.
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