RBS share price: what’s the outlook as Saudi merger strengthens core capital?
Royal Bank of Scotland saw its share price rally on at the start of the week after the lender revealed that merger between two Saudi-based banks will strengthen its core capital.
Royal Bank of Scotland (RBS) saw its share price rise more than 3% since Monday after the lender revealed how a merger between Alawwal Bank and Saudi British Bank would help strengthen its core capital ratio.
RBS records drop it quarterly profit
The boost to its core capital ratio from the Saudi bank merger is welcome news after RBS recorded a drop in its Q1 profit in April.
Since trading update, RBS has seen its share price fall by more than 18% from 263p a share to 221p a share as of 14:35 GMT on Wednesday.
Analysts at HSBC reiterated their ‘buy’ rating for RBS last week, but did not provide a target price for the stock. However, the UK lender has an average valuation of 301.69p a share according to a reent consensus compiled by MarketBeat.
RBS core capital bolstered by Saudi merger
RBS was able to bolster its core capital ratio through its Dutch subsidiary NWM NV, which holds and aggregate 40% shareholding in Alawwal Bank, dating back to the lender’s acquisition of ABN AMRO back in 2007.
‘We are pleased that this merger has now concluded; it will help facilitate the future exit of our shareholding as we continue to focus on our key target markets,’ RBS CEO Ross McEwan said.
‘The release of capital will also have a positive and material financial impact for RBS,’ he added.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Be ready to act on ECB opportunities
Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 22 April 2021.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets