Royal Bank of Scotland Group expects to post a "substantial" full-year loss after transferring 38.3 billion pounds ($61 billion) of its worst loans to an internal "bad bank" under government pressure.
The bank, which is 82 percent owned by British taxpayers after a bailout five years ago, expects to log as much as 4.5 billion pounds of write-downs in the fourth quarter as it starts to sell the loans, Edinburgh-based RBS said in a statement Friday.
It also will speed up plans to sell its U.S.-based Citizens Financial Group Inc. unit to bolster capital.
Citizens Bank is the second-largest retail bank in the Pittsburgh region behind PNC, bursting onto the scene in 2001 with the purchase of Mellon Financial Corp.'s branch banking business. (Mellon also used a so-called bad bank in the late 1980s to liquidate nearly $1 billion in bad loans as part of a rescue plan for the ailing Pittsburgh-based financial institution.)
RBS will sell an initial stake in Rhode Island-based Citizens, which it bought in 1988, in the second half of 2014 and divest the rest by the end of 2016. The original plan, outlined in February, had been to start an initial public offering in two years.
RBS's new CEO, Ross Mc-Ewan, told investors that Citizens was "a good business with the potential to build profitability and its own shareholder base, but it's not one that is an essential element of our strategy."