Royal Bank of Scotland Group (LON:RBS) is among initial bidders for the £3.7-billion book of mortgages of Tesco’s (LON:TSCO) banking unit, Sky New has revealed. The potential deal would mark the part government-owned lender’s biggest acquisition since the financial crisis.
RBS’ share price fell in the previous session, giving up 0.95 percent to close at 215.70p, underperforming the broader UK market, with the benchmark FTSE 100 shedding 0.23 percent to end trading at 7,407.50 points. The lender’s shares have lost more than 13 percent of their value over the past year, as compared with about a two-percent fall in the Footsie.
RBS eyes Tesco mortgages
Sky News reported on Friday that RBS is among the initial bidders for Tesco Bank’s home-loan portfolio. Last month, Britain’s biggest supermarket said that its banking unit was looking at options to sell its existing mortgage portfolio.
If RBS succeeded in buying the assets, it would mark its biggest acquisition since its £45.5-billion taxpayer-funded bailout during the financial crisis. Sky News notes that the group’s only corporate purchase in the last decade has been that of FreeAgent, a financial technology business that it bought last year for about £50 million.
City sources told the newswire that other potential bidders had also expressed an interest in buying the Tesco Bank loan portfolio, with the sale being handled by investment bankers at Citi. Nationwide, the UK’s biggest building society, is thought to be among those to have lodged an interest, although the status of any offer from it is unclear.
Analysts on FTSE 100 bank
Royal Bank of Canada, which rates the bailed-out lender as a ‘sector performer,’ lowered its target on the RBS share price from 260p to 230p last week, while Jefferies reaffirmed the company as a ‘buy,’ without specifying a valuation on the shares. According to MarketBeat, the FTSE 100 group currently boasts a consensus ‘buy’ rating and an average price target of 297.85p.
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.