RBS' Journey to Privatization is Expected to Begin Shortly
Per an article by Sky News, the British Government is currently mulling selling about 10% stake in The Royal Bank of Scotland RBS this week. The sale is expected to result in substantial loss for the taxpayer owing to a significant drop in value of the bank since bailout.
The disposal is expected to return about £3 billion as the bank’s shares are currently trading below 300 pence compared with 502 pence at the time of bailout. Per the article, the sale can get delayed due to market conditions or if ministers feel that the taxpayer is not getting value for money by the deal.
The government had rescued Royal Bank of Scotland from collapse at the time of financial crisis by paying £45.5 billion, which gave it 70.5% ownership in the bank.
In April 2018, the taxpayer announced its plan to sell-off its stake over a period of five financial years beginning 2018-19. However, the process was being delayed due to the impending settlement with the U.S. Department of Justice over deceptive mortgage marketing strategies.
Recently, the bank settled the probe by agreeing to pay £3.62 billion to the regulator, which not only cleared way for the government to resume stake sale but is also likely to help it function normally.
Royal Bank of Scotland announced that it will resume payment of dividends post settlement, which comes as relief to shareholders. Also, the bank's return to full private ownership will enable speedy recovery in its share price and operations.
Shares of Royal Bank of Scotland have gained 1.8% year to date against 6.3% decline recorded by the industry.
The stock currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the same space are Credicorp Ltd. BAP, Banco Santander Chile BSAC and The Bank of N.T. Butterfield & Son Limited NTB. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Credicorp has been raised nearly 1% for the current year, in the last 60 days. The company’s share price has jumped 39.5% in the past year.
Banco Santander Chile has witnessed stable earnings estimates for 2018, in the last 60 days. Its share price has risen 38.5% in the past year.
Bank of N.T. Butterfield & Son’s shares have gained 48.5% in a year and its earnings estimates for 2018 have moved up 4.1% in the last 60 days.
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Royal Bank Scotland PLC (The) (RBS) : Free Stock Analysis Report
Banco Santander Chile (BSAC) : Free Stock Analysis Report
Credicorp Ltd. (BAP) : Free Stock Analysis Report
Bank of N.T. Butterfield & Son Limited (The) (NTB) : Free Stock Analysis Report
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