RBS share price: Fiscal watchdog scraps £21.5bn sale estimate

on Nov 24, 2016
Updated: Oct 21, 2019

The UK’s Office for Budget Responsibility (OBR) has scrapped an estimate to recover £21.5 billion from the taxpayers’ stake in Royal Bank of Scotland Group (LON:RBS) until 2021. The revised estimate comes as new Chancellor of the Exchequer Phillip Hammond signalled that sales of shares in the bailed-out lender were unlikely to occur in the near term.

RBS’ share price has slipped into the red in London this morning, having shed 0.34 percent to 204.30p as of 10:19 GMT, slightly underperforming the benchmark FTSE 100 index which is currently 0.11 percent worse off at 6,809.89 points. The group’s shares have lost more than 32 percent of their value this year, as compared with about a nine-percent rise in the Footsie.
The OBR said in its economic and fiscal outlook report yesterday that it had scrapped its March forecast for sales of shares in RBS, which included £21.5 billion recovered between 2016-17 and 2020-21, following the £2.1 billion in 2015-16. The fiscal watchdog explained that the decision came as the Chancellor signalled in yesterday’s Autumn Statement that while the government was planning to seek opportunities for further sales, it judged that the need to resolve legacy issues made that challenging in the near term.

RBS, bailed out by the UK government during the financial crisis, still faces a hefty settlement with the US over mis-sold toxic mortgage-backed securities, and is struggling to dispose of its Williams & Glyn branches which it is required to divest by the end of next year as a condition of its taxpayer-funded rescue.
The 20 analysts offering 12-month price targets for RBS for the Financial Times have a median target of 187.50p, with a high estimate of 346.00p and a low estimate of 120.00p. As of November 19, the consensus forecast amongst 24 polled investment analysts covering the stock has it that the company will underperform the market.
As of 10:57 GMT, Thursday, 24 November, Royal Bank of Scotland Group share price is 202.40p.

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