Broker snap: Investec reiterates sell on RBS

31st Oct 2013 11:46

Investec reiterated its sell recommendation on Royal Bank of Scotland ahead of rumours that its good bank/bank review will be announced on Friday alongside the company's third quarter statement. Analyst Ian Gordon said even in the absence of an outright good bank/bad bank split, more "covert" steps may still destroy value, though he believed these would not be the sort that could send the RBS share price straight below £3."We believe that Chancellor Osborne will recognise the negative implications of such a course of action," he said.Instead, Gordon cited three potential covert measures, including 'phase four' rationalisation of international banking that would "crush" 2014 expected earnings, internal reorganisation to redesignate existing "core" assets as "non core" in order to accelerate disposals "with less regard for value optimisation", and finally acceleration of the flotation of Citizens in the US that would lose out on potential optimal value. OH