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Breakingviews: RBS' $14 bln pitch

Monday, September 08, 2014 - 03:23

Jeff Goldfarb and Antony Currie dig into the rosy assumptions that the Scottish bank is baking into the upcoming IPO of U.S. lender Citizens Financial.

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Royal Bank of Scotland getting top dollar for citizens financial bank United States four months after it listed to go public. It finally got the pricing down it's gonna have a fourteen billion dollar valuations -- raised four billion. Pretty surprising given what the numbers tell us talk us through what -- we get this when it first listed its desire to go public yeah. And there are making all four returns last year I think 3% return -- -- It says fast system which doesn't translated -- Knight doesn't know what I also play -- billion is pretty much. Intangible but. -- -- And you think. They've got to get a certain level of return on tangible book says it -- books what do this and -- is like 10% exact -- have sent sect say if you think. As you think 3% -- -- -- commonly got a little bit on potential last year the for the first six months that you know that -- to just Davis and sent its -- time so that that at least they're making practice what it gonna let's also compare its to last 6000 lost. That'll sounds fine. But any -- the valuation of treatment she's a cable. This is that you'd that you brought on tent behind the ball high how you gonna get this to -- why investors -- -- Really taken a shot at this club although I don't know for sure but that's where indicated I think little obvious is fishing pundits again this is a bank owned and it's almost exit and Mikey came which needs to get ready -- need. And the bulls have seen it for -- to pay -- polygamy and the like at some point that it many of the things these things. Specific -- the people things one business -- fair enough insulin that city. We think that if interest rates go up by two percentage points in the next year or so then we will get a six point six an increase in netting just and got. Which is great. If it happened right it says number one. Go to what is -- -- Santiago like success but we think we get back capital we got more capital map regional I think it's the and to get this one on the banks. That -- if it costs the cool -- to tip of the stress test that initiative -- the quote is it monstrous right so the chances the feds say next yea -- give capital back at least that they want to get back. Is probably relatively slim in this state counseling from task but obviously investors sort of ever gave -- they're not. Probably what's number four then you've got cost cuts and they reckon they can get it get that cost that's nasty about a 70% just tennis and institutions reaches sixty. Am I -- that number is there a little bit off but I think if you look at when that six months that the us exposition maybe they're getting that. They think now -- extra the -- put a suit listened to -- deserves a lot of things have to go right investors based on the where pricing scar on the secular thinker do you ever get out there that's a two to three objection to give control of this. And I can -- Passion for Essex house this year but it also they're relying I think on the fact that few of the financial component initiated -- it's the likes critic accomplice sink -- -- bank and bank in Texas went public in -- present these valuation about a month -- -- citizen jump on the bandwagon and be as well. And yet he says it was a chance that the Fed allows a few moment to get -- CIT. That maybe they can visit our buyers citizens in -- -- by something we're all people -- aren't we were there okay but I'll let IPO coming up soon. We're back corporate news tomorrow.

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Breakingviews: RBS' $14 bln pitch

Monday, September 08, 2014 - 03:23