Business

RBS may sell Citizens Bank unit

Royal Bank of Scotland’s interest-rate rigging scandal may force it to unload its US commercial banking operation, Providence, RI-based Citizens Bank, The Post has learned.

The $138 billion bank, with 1,500 branches in 40 states, was acquired by RBS about 22 years ago.

Toronto-Dominion, the Canada-based parent of TD Bank, which operates 1,200 branches mostly in the eastern US, has held informal discussions with RBS about its Citizens Bank unit, sources said.

RBS, said sources, has told interested parties it is looking for $14 billion to $16 billion for the bank — while TD is said to be thinking more along the lines of $8 billion to $12 billion.

The talks were held two or three months ago, these sources said, and are not currently active.

However, Toronto-Dominion believes RBS and the British bank’s CEO, Stephen Hester, may be forced to sell Citizens as it comes under greater scrutiny from regulators amid a growing interest-rate rigging scandal linked to the London interbank offered rate, or Libor, sources said.

The probe has already forced rival Barclays to shell out more than $450 million in fines.

Currently, UK government-owned RBS is trying to negotiate its own settlement with regulators that could deliver a wallop to its balance sheet.

That, along with pressure to get its fiscal house in order amid the still unresolved European debt crisis, may set the stage for a unit sale, sources said.

The UK government currently owns an 83 percent stake in RBS after extending a lifeline to the troubled bank during the heart of the financial crisis.

“We have a great franchise delivering great growth, so we’re not in a hurry to make any deals,” said a TD spokesman.

“Having said that, if there is something that makes sense financially and strategically and fits within our risk appetite, we would consider it,” he said.

A spokesman for RBS in its Stamford, Conn., office declined comment. RBS plans to report its quarterly earnings today.

mark.decambre@nypost.com