Analysts believe Citizens could be worth as much as $15bn (£8.9bn), and RBS is floating off at least 25 per cent this year.
The plan is to sell the initial tranche in the fourth quarter of 2014, before selling down the remainder by the end of 2016.
As well as cutting back RBS’s international operations, selling Citizens will bring in some much-needed cash and reduce the strain on its capital position – after losing more than £8bn in 2013 as capital buffers took a beating.
The S-1 document filed with the Securities and Exchanges Commission in the US last night is a draft document which is then reviewed by the regulators over the next 12 to 15 weeks, before the bank puts it a full filing for the initial public offering (IPO).
“The divestment of Citizens is a key component of our plan to continue to strengthen RBS’s capital position,” said RBS chief Ross McEwan.
“The achievement of our capital plan will allow us to focus fully on the needs of our customers.”