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Cameron: RBS must accelerate reform
By Darshini Shah | Tue, 19th February 2013 - 13:39
Prime Minister David Cameron on Tuesday urged Royal Bank of Scotland (RBS) to "accelerate the adjustments" of its business.
Speaking on a trip to India, Cameron said he was "keen to examine all possibilities" for putting RBS back into the private sector, but played down reports the government was preparing to sell its stake in the bank.
RBS is 82% owned by the taxpayer after the government injected £45 billion to stop it from collapsing during the financial crisis.
Chief executive Stephen Hester started the process of reforming the bank in 2009, with the aim of making it safer and more profitable. This included selling off its less important businesses and paring back its investment arm.
At the time, Hester said the process would take up to five years, while in November, the bank said its restructuring plan was on track and would be completed in the next 18 months.
RBS has already made progress. A 30% stake in its insurance business, Direct Line Group (DLG), has been floated on the stockmarket. However, there have been some hitches too - it has been struggling to meet its aim of selling more than 300 branches by 2014.
RBS will report its fourth-quarter results on 28 February. The bank is set to report another big loss for the final quarter of 2012, with Investec's Ian Gordon predicting £1.7 billion of net negative exceptional items and a net asset value per share that should fall to around 460p. He warned: "Normality may still not return before 2017" and had a 'sell' recommendation on the stock.
Chris Manners, analyst at Morgan Stanley, rated the stock a 'hold', explaining: "Although [we] see value at current levels, the prospect of dividends and exit of UK government appears somewhat far off."