Britain’s fiscal watchdog has increased its estimate of the likely loss to taxpayers from Royal Bank of Scotland Group’s (LON:RBS) rescue in 2008, Reuters has reported. The UK government rescued the blue-chip lender with a £45.5-billion bailout during the financial crisis.
RBS’ share price has surged in London this morning, having climbed 1.84 percent to 266.00p as of 08:46 GMT, outperforming the broader UK market, with the blue-chip FTSE 100 index currently standing 0.12 percent higher at 7,167.53 points. The group’s shares have added about 2.6 percent to their value over the past year, as compared with about a 0.3-percent gain in the Footsie.
Loss on RBS rescue
The Office for Budget Responsibility (OBR) disclosed yesterday that it had increased its estimate for the taxpayer’s loss on RBS to £31 billion, up £2.4 billion from its October estimate. The update came even as the bailed-out lender, which remains majority-owned by the UK government, announced earlier this year that it would pay a special dividend as it delivered a rise in full-year profit.
The fiscal watchdog disclosed that following the FTSE 100 group’s special dividend announcement, it had raised up the amount received on the government’s shareholding to £1 billion in 2019-20, up £600 million on its October forecast. The OBR, however, also estimates that the value of the Treasury’s shares in RBS has fallen to £18.2 billion, from the £20.3 billion estimated in October.
Analysts on lender
Goldman Sachs, which sees RBS as a ‘buy,’ boosted its price target on the shares from 350p to 395p this week, while earlier this month, Credit Suisse, which is ‘neutral’ on the stock, lifted its valuation on the group from 280p to 285p. According to MarketBeat, the bailed-out lender currently has a consensus ‘buy’ rating and an average price target of 309.77p.