Published Tue, 05 Jun 2018 11:54:06 on Interactive Investor
Whatever your view of the government's controversial, loss-making sale of shares in Royal Bank of Scotland (RBS), there's no doubting that the move is a hugely significant moment for followers of the UK banking sector.
Like its former taxpayer-owned cousin Lloyds Banking Group (LLOY), RBS shares have continued to be met with scepticism in the City, despite the pair's undoubted turnaround progress and improving dividend prospects.
The majority of brokers remain neutral on RBS, which probably comes as no great surprise given that 62% is still in the hands of the Treasury even after a share placing at a price of 271p each.
But there are notable pockets of support, including from leading fund manager Neil Woodford after he started investing in RBS in 2017.
Source: interactive investor Past performance is not a guide to future performance
And only last week, Berenberg upped its target price from 300p to 340p as the broker questioned whether the market was discounting the potential for big buybacks stemming from the £5 billion of excess capital sitting on RBS books. It currently expects a 15p dividend for 2018 rising to 25p in 2019.
The problem for RBS investors is that there have been many false dawns in relation to a potential share price recovery. Back in 2009, RBS shares were trading above 500p until optimism was buried by a wave of conduct and restructuring costs.
Investec Securities analysts Ian Gordon pointed out yesterday that... Read more