“The sale is set to start in the near future, but it is likely to happen in tranches over a number of years and will not initially involve the man on the street,” he said.
“It appears that the government feels the shares will be better off in the hands of investors. However, the sale is expected to a difficult one, as the bank is still on the road to recovery and has reported seven years of losses since the bail out.
“We remain cautious on RBS and believe there are better opportunities for followers of the banking sector, such as HSBC which we currently recommend as a ‘buy’ for lower-risk investors looking to achieve income.”
Industry shake-up
There were also references yesterday to wider banking sector changes, with Bank of England governor Mark Carney suggesting a possible switch in focus to penalising individuals rather than corporations alongside ensuring London retains its status as the capital of global banking.
“There were indications in yesterday’s speech that there will penalising of individuals for misdemeanours, rather than shareholders – i.e. criminalising misconduct as opposed to bills that shareholders ultimately pay,” said Box.
“Also, there was rhetoric around London remaining as the place where banks want to be headquartered, which contradicts the rapidly-increasing bank levy. There is a bit of brinkmanship between Osborne, HSBC and Standard Chartered, with meetings going on behind closed doors. We will have to wait and see what happens, but I think it will be a generally positive outcome for the industry.”
