Broker snap: Investec downgrades RBS to 'sell'

16th Aug 2013 09:30

Investec has downgraded its rating for part-nationalised lender Royal Bank of Scotland from 'hold' to 'sell', saying that the stock's valuation appears full."RBS shares have (understandably) responded well to the appointment of new CEO Ross McEwan, and a wave of speculation that the worst excesses of the Government's threatened 'good bank/bad bank' split may yet be avoided. We hope sense will prevail and that this proves to be the case," said analyst Ian Gordon.He said he still believes RBS is firmly on track to eventually achieve a sustainable recovery."However, we still believe that even the current status quo offers a painfully slow pace of recovery with return on equity of 0% in 2013e, 3.0% in 2014e and 5.0% in 2015e."Gordon pointed out that the shares trade on 0.8 times 2014 tangible net asset value. With the broker's 340p target price left unchanged, it now implies modest downside to currently prices."Standard Chartered ('buy') is - by far - our preferred play in the UK bank sector," Gordon said.RBS's share price was at 335.4p by mid-morning on Friday, down 1.53% on Thursday's close of 340.6p.BC