ROYAL Bank of Scotland will raise £1.8bn when it spins off a 25 per cent stake in one of the US' largest regional banks.

Rhode Island-based Citizens is listing on the New York Stock Exchange at a lower-than-expected level after taxpayer-owned RBS cut the offer price to $21.50.

Citizens has £80bn in assets, 18,600 workers and 1,370 branches across the New England, mid-Atlantic and Midwest regions.

RBS first said it planned to float Citizens, which it bought for £272m in 1988, last February.

Since its rescue from the brink of collapse in 2008, RBS has focused on offloading many of its foreign and investment banking assets to become a more UK-focused bank centred on retail and commercial banking.

The share listing could raise as much as £2.1bn if an over-allotment option is exercised.

Brokers expect RBS to sell off its remaining stake in Citizens by the end of 2016.

Ross McEwan, chief executive, added: "The sale of Citizens is an integral part of the RBS capital plan.

"Selling Citizens will significantly improve our capital position and help us to create a strong and secure bank that can continue to fully support the needs of its customers."