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) Source: Bloomberg

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 Markets 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. See full non-independent research disclaimer and quarterly summary.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Spread bet and trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Bid
Offer
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.