Royal Bank Of Scotland Is Making Progress Slowly
The Royal Bank Of Scotland: Undervalued As Restructuring Moves Forward
Helix Investment Research • 17 Comments
Helix Investment Research • 17 Comments
Wed, May 18, 5:38 PM
Wed, May 18, 10:31 AM
- A new poll shows the "remain" camp gaining strength, with an 18 percentage point lead roughly one month ahead of the Brexit referendum.
- The pound's higher by 0.9%, and the FTSE lower by 0.15%. Outperforming by a mile are the banks: Barclays (BCS +5.3%), RBS (RBS +6%), HSBC (HSBC +1.6%), Lloyds (LYG +4.6%).
Tue, May 3, 9:15 AM
Fri, Apr. 29, 9:09 AM
- “It looked like a headline miss but it’s all overshadowed by yesterday’s Williams & Glyn uncertainty, which hurts, or at least postpones, the overriding investment case,” says Investec's Ian Gordon, who rates the stock a Buy.
- Yesterday, the bank cast doubt on its ability to sell Williams & Glyn by the December 2017 deadline, which would delay any return of capital to shareholders even further (there's been zero since being bailed out in 2008).
- Royal Bank of Scotland (RBS -3.8%) this quarter paid €1.2B to the government as part of its bailout repayment.
- Turning to operations, revenue fell 13% Y/Y, driven by a 36% decline in the shrinking investment bank. Operating expenses fell 33% thanks to lower legal and restructuring costs. Pretax profit excluding those charges was €440M, down from €1.4B a year ago.
- The bank's capital ratio slipped to 14.6% from 15.5%, but remains higher than the 13% target.
- Shares are lower by 4.5% in London action.
- Previously: The Royal Bank of Scotland reports Q1 results (April 29)
Thu, Apr. 28, 9:41 AM
- Royal Bank of Scotland (RBS -4.6%) agreed to sell the unit as a condition of its 2008 bailout, but now sees "significant risk" it won't be able to unload prior to the December 2017 deadline.
- "Due to the complexities of Williams & Glyn's customer and product mix, the program to create a cloned banking platform continues to be very challenging and the timetable to achieve separation is uncertain," says the company, one day ahead of its Q1 earnings report.
- The bank is exploring other means to achieve separation and divestment, but says the financial impact will likely be "significantly greater" than the hoped for €630M in costs.
Fri, Feb. 26, 9:17 AM
- Gainers: RRM +49%. SUNE +31%. AMTG +31%. SGMS +27%. STMP +26%. GOL +19%. SPLK +17%. JCP +16%. HLF +13%. BIDU +11%. SYN +10%. GLBL +8%. WLL +9%. FCX +7%. CHK +7%. PANW +8%. NRF +6%. TCK +6%. MRO +6%. KHC +6%. GRPN 5%. HLT 5%.
- Losers: RJET -83%. PPHM -60%. CARA -36%. WTW -28%. SWN -14%. GG -11%. FOLD -9%. RBS -8%. MNKD -6%. ARI -5%.
Fri, Feb. 26, 7:44 AM
- "I haven't found any nuggets of good news," says Investec's Ian Gordon, speaking about Royal Bank of Scotland's (NYSE:RBS) results in which the state-owned lender reported its eight consecutive annual loss.
- While the headline bottom-line number was a loss of £2B, stripping away things like litigation brought pre-tax profit to £4.4B - still off by nearly one-third from 2014, and shy of consensus.
- Shares, meanwhile, are tumbling 8.7% in London action as investors react to yet another delay in capital returns. Management had previously guided that buybacks/dividends could begin as early as next year, but "outstanding issues" likely means a delay to that schedule.
- "You’ve got to be taking a greater than one year view on capital return and a three-to-four year view on normalization of earnings, and that’s a timeframe which exceeds most investors’ appetite," says Gordon.
Jul. 30, 2015, 10:17 AM
- Q2 net profit of £293M was up 27% from a year ago. Underlying operating profit - which excludes restructuring costs and conduct fines - of £1.81B slipped from £1.95B as the bank continues to pull back from investment banking.
- RBS initially jumped higher in London action, but shares are now lower by 2.7%.
- The mortgage business was a strong spot, with gross new lending up 43% for the quarter. The bank's capital ratio of 12.3% rose from 11.5% a quarter earlier, and CFO Ewen Stevenson promises the chance of a dividend once the ratio tops 13%. The first quarter of 2017 seems the earliest to expect a payout, he says.
- Source: FT
Jul. 8, 2015, 8:40 AM
- Unveiling the summer budget, U.K. Chancellor Osborne says the government will gradually phase out the bank levy over the next six years, replacing it with a new 8% surcharge on profits. The difference? The new charge applies only to U.K. assets, while the bank levy applied to global balance sheets.
- Osborne may have made the change in response to threats from banks to leave the U.K. because of the levy (which Osborne increased 50% in the last budget).
- The FTSE 350 banking index is higher by 1.6% following the news. Watching with interest: HSBC, RBS, Barclays (NYSE:BCS), Lloyds (NYSE:LYG), Standard Chartered (OTCPK:SCBFF).
May 20, 2015, 10:10 AM
- Those facing criminal charges from the DOJ are UBS (already reported, the stock is up 3.4% today), Barclays (BCS +2.5%), Citigroup (C -0.5%), JPMorgan (JPM -0.4%), and RBS (RBS +1.6%).
- Bank of America (BAC -0.4%) faces a $205M fine by the Fed, but no criminal charges. Fines by the Fed for the other banks range from $274M-$342M.
- There are fines from other regulators as well, with the total for all the banks summing to $5.8B. Barclays looks to be hit the hardest on that front, with total monetary penalties of $2.4B.
Feb. 26, 2015, 10:06 AM
- "For RBS [this] marks the end of the stand-alone global investment bank model," says CEO Ross McEwan. Royal Bank of Scotland (RBS -5.9%) will "substantially reduce" its investment banking operations in the U.S. and Asia, and fully exit markets businesses in Central and Eastern Europe, the Middle East, and Africa - a full 25 countries.
- CFO Ewen Stevenson says more than half of the roughly 2K jobs on the company's vast Stamford trading floor will be cut, and a review is set for whether that base is still needed.
- All that's left in sales and trading outside of the U.K. will be operations in Stamford (for now) and Singapore. There will also be a sales office in Japan and client coverage teams in a number of European countries.
- There are plenty of sellers today, but not everyone's a bear. Some analysts note these moves should improve capital ratios, and RBS's plan to return to being just a bank isn't exactly a new one - today's announcements just point to a speeded up the process.
- Management also warns there could be more fines coming for past misconduct.
- Previously: RBS reports annual loss on Citizens writedown (Feb. 26)
Feb. 26, 2015, 6:45 AM
- Mizuho Financial Group (NYSE:MFG) has agreed to buy Royal Bank of Scotland's (NYSE:RBS) U.S. and Canadian loan commitments in a deal worth $3B.
- The deal is likely to close around the middle of the business year starting in April.
- RBS -3.5% after posting its seventh straight annual loss earlier this morning.
Jan. 9, 2015, 7:33 AM
- U.K. Financial Investments - the group managing the country's stakes in bailed out banks - is discussing a possible £2B capital raise with Royal Bank of Scotland (NYSE:RBS), reports Sky News.
- The U.K. holds an 80% stake in the bank.
- Talks are being complicated by a clause in the bailout agreement which prevents the government's stake from being diluted by a share sale.
- The stock's lower by 2% in London action.
Nov. 21, 2014, 11:01 AM
- Without the error, the bank's full-year CET1 ratio under the EBA's stress test's adverse scenario would have been only a barely-passing 5.7% (5.5% was the passing level) instead of the initially reported 6.7%.
- The bank's currently reported (as of Sept. 30) CET1 ratio of 10.8% is not affected.
- RBS -1.3% on a strongly green day for European markets.
Sep. 19, 2014, 12:25 PM
- A check of European closing prices finds the euphoric early reaction to the "No" vote from Scotland mostly faded by day's end. The Stoxx 50 (NYSEARCA:FEZ) closed just 0.2% higher, with the U.K.'s FTSE 100 (NYSEARCA:EWU) gaining 0.3%.
- Looking at U.K. bank ADRs: RBS (RBS +1.2%), Barclays (BCS -0.9%), Lloyds (LYG +0.5%), HSBC (HSBC -0.2%).
- Dealing with its own separatist movement, Spain (NYSEARCA:EWP) managed just a 0.1% gain.
- Previously: Euro shares lean green on "No" vote
- Previously: Might Catalonia secession fears ebb following Scotland vote?
Sep. 8, 2014, 7:59 AM
- "A wall of money has gone out of the banks and into fines and redress," says KPMG's U.K. head of banking Richard McCarthy. "Hopefully the most egregious things have come out and hopefully the banks will be able to move forward."
- Over the last five years, according to KPMG, the U.K.'s largest banks - BCS, RBS, HSBC, LYG, OTCPK:SCBFF - have cut consumer and business lending by $595B, or 14%.
- "There is light at the end of the tunnel," says McCarthy, with the report noting redress costs and fines fell 44% to £2.4B in 2014's first six months from a year ago.
- Meanwhile, the banks are sharply lower premarket over Scottish independence jitters. BCS -3.5%, RBS -4.1%, LYG -4.9%, HSBC -2%.
- Previously: Cable tumbles over Scotland referendum
Royal Bank of Scotland Group Plc operates as an international banking and financial services company that provides a wide range of products and services to personal, commercial, and large corporate and institutional customers through its two principal subsidiaries: The Royal Bank of Scotland Plc... More
Industry: Money Center Banks
Country: United Kingdom
Other News & PR