By Corrie Driebusch 

Royal Bank of Scotland Group PLC sold 135 million shares of Citizens Financial Group Inc., raising $3.2 billion for the British bank.

The share sale, priced at $23.75 a share late Wednesday, represents a 6.8% discount to Citizen's closing price of $25.49 on March 12, the last close before the share sale was announced.

The offering comes as RBS looks to focus on its domestic market and reduces its stake in Citizens to below 50%.

RBS said Thursday that the proceeds would be used for general business purposes, with Chief Executive Ross McEwan saying the sale was "an integral part of the RBS capital plan" that would allow the lender to create a stronger, safer U.K.-focused bank. RBS aims to sell all of its Citizens stock by the end of 2016.

The discount the shares were sold at is more than the average discount of 6% for U.S.-listed follow-ons so far this year but below the average 7.4% discount for follow-on offerings in 2014, according to Dealogic.

The sale by RBS appeared to go smoothly--a contrast to last September, when Citizens launched its IPO. At the time, it took some convincing of potential investors.

Ahead of its IPO, in March 2014, Citizens failed to meet requirements of the Federal Reserve's "stress test," an annual review to measure a firm's ability to continue lending during a severe economic downturn. During its IPO roadshow, Citizens executives openly admitted the bank needed to boost its financial performance.

Management at the bank has repeatedly touted specific plans for improvement, including achieving a 10% return on equity by the end of 2016 through cost-cutting and loan growth. In its fourth-quarter results, Citizens appeared to be making progress toward its goals, reporting 6.8% adjusted return on equity compared with 6.2% for the third quarter.

RBS is selling off its stake in Citizens following British political pressure to refocus on U.K. clients. In its annual report, the bank took a $4 billion hit on the goodwill value of Citizens as it was forced to write the stake down to its estimated disposal value.

Citizens, based in Providence, R.I., operates one of the largest regional banks in the U.S., with branches throughout New England, the mid-Atlantic and Midwest.

Write to Corrie Driebusch at corrie.driebusch@wsj.com

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