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.
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.