RBS was forced to lower the price of the Citizens Financial IPO
RBS was forced to lower the price of the Citizens Financial IPO. Reuters

The Royal Bank of Scotland reportedly faced pressure to lower the price of shares sold in the Citizens Financial US flotation to $21.50 apiece, valuing the British bank's American unit at about $12bn.

The Citizens initial public offering (IPO) raised about $3bn (£1.89bn, €2.33bn) from the sale of 140 million shares on 23 September, which is $500m lower than what RBS could have raised had it priced the share sale at the top of the previous $23 to $25 price range.

RBS was forced to lower the price to dispel investor concerns surrounding Citizens' ability to meet its financial targets, the Financial Times reported.

Citizens' stock will debut on the New York Stock Exchange (NYSE) later today under the ticker symbol "CFG".

Investors have questioned Citizens' ability to raise its return on tangible common equity, a profitability metric, from 5% in 2013 to 10% over a two to three-year period.

A large unnamed institutional investor in US banks told the FT: "The goals and target of the company are relatively lofty at a time when the competitive environment is already challenging.

"The demand is probably at least a dollar or two below the asking range."

As of May, Citizens had around five million customers, £72bn of total assets, and around 1,370 branches in 12 states across the US.

In November 2013, RBS confirmed that it "would accelerate" the partial sale of Citizens, with the aim of fully divesting the business by 2016.

RBS bought Citizens for $440m in 1988, and subsequently turned it into one of the biggest regional banks in the US.

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