RBS share price falls on negative comments by Goldman, Nomura

on Nov 13, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Wednesday, November 13: Shares in Royal Bank of Scotland (RBS) fell 2.4 percent to close at 331.6p yesterday after Goldman Sachs removed the stock from its ‘buy’ list, downgrading its rating to ‘neutral’, while Nomura reiterated its ‘reduce’ recommendation. Goldman also cut its valuation of the RBS share price by 30p to 370p. It noted that the lender’s plans to create an ‘internal bad bank’ to manage its toxic assets and to fully divest its US banking subsidiary Citizens by the end of 2016 are viewed favourably, but the increase in the group’s common equity Tier 1 (CET1) capital ratio target from at least 10 percent to at least 12 percent reduces the upside potential for the share price.

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At the same time, Nomura raised its price target by 15p to 285p, which is still about 14 percent below the current market price. The investment bank noted that RBS’s future value is driven by its core profitability, which might be threatened by potential litigation charges in excess of £6 billion by 2018, a sale of Citizens at below 1.1 times price to book value, restructuring charges not yet announced, and changes in the macroeconomic environment. “We retain our reduce rating and prefer Barclays, which trades on similar valuations with better return on equity levels,” Nomura analyst Chintan Joshi said in a note, as quoted by the Guardian.

Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
The downbeat updates from Goldman and Nomura came just a day after US investment bank Jefferies issued a buy note and raised its price target on RBS by 51p to 441p. Last week BNP Paribas cut its rating on the majority state-owned British lender from ‘neutral’ to ‘underperform’, while Societe Generale raised its recommendation from ‘sell’ to ‘hold’.

The RBS share price extended yesterday’s losses this morning. The stock was down 1.0 percent at 328.3p at 9:08 UTC.
**RBS steps up SME lending efforts**

The Financial Times reported yesterday that RBS has reinforced its efforts to boost lending to small and medium-sized companies (SMEs) after a recent independent review of the bank’s lending practices found that it turned away three-in-four small businesses that had approached it for loans. Ian Cowie, head of business and commercial banking, has embarked on a nationwide tour to meet potential borrowers.

Describing such a meeting in Liverpool, the FT writes that the UK’s largest lender to SMEs must deal with increased competition from providers of non-bank lending by improving its flexibility and understanding of the companies’ business and needs. The state-controlled bank has £20 billion available to lend SMEs, and aims to help expand more businesses and create jobs.
**As of 8:54 UTC buy RBS shares at 329.70p.**
**As of 8.54 UTC sell RBS shares at 329.50p.**
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.
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