The UK government has unveiled plans to sell all of its shares in Royal Bank of Scotland Group (LON:RBS), Reuters reports. The Treasury still holds 62.4 percent in the lender which was rescued by the British taxpayer with a £45.5-billion bailout during the financial crisis.
RBS’ share price rallied in the previous session, gaining 2.31 percent to close at 230.10p, and outperforming the rally in the broader UK market, which saw the benchmark FTSE 100 index adding 86.76 points to close 1.25 percent higher at 7,026.32. The group’s shares have given up just under a fifth of their value over the past year, as compared with about a 6.4-percent dip in the Footsie.
RBS exit plan
Reuters reported last night that the Office for Budget Responsibility had disclosed in a document published yesterday that the government planned no further sales of RBS shares this year but would raise £20.6 billion by selling its remaining shares in the group over the next five years.
“We consider it reasonable this plan can be achieved,” the document said, adding that the bailed-out lender had made good progress in turning itself around and drawing a line under crisis-era legal problems. The document also increased the estimated loss Britain is expected to make on the rescue to £28.5 billion.
Analysts on bank
Barclays, which is ‘overweight’ on RBS, boosted its price target on the shares from 330p to 340p yesterday, while Berenberg reaffirmed the lender as a ‘buy,’ without specifying a valuation on the shares. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 312.50p.
RBS updated investors on its third-quarter performance last week, setting aside an additional £100-million charge due to the ‘more uncertain economic outlook’.