Broker snap: Investec upgrades RBS but stays cautious

14th Nov 2013 09:51

Investec has upgraded its rating for UK domestic banking group RBS from 'sell' to 'hold', but maintained its cautious view on the stock.Analyst Ian Gordon said that the RBS "disaster story" has been running since 2007, yet he still sees little hope of a meaningful near-term recovery for shareholders."Perhaps in recognition of its limited strategic options, RBS has been obliged to embark on round after round of shareholder value destruction to accommodate the requirements of its political and/or regulatory masters. We see the planned accelerated disposal of its residual non-core assets and Citizens as particularly unfortunate both in terms of (1) increased "real" losses and (2) the abandonment of upside potential which might have emerged over time. "We don't happen to believe that RBS management are to blame, but for the shareholder, what difference does that actually make?"The broker has cut its target price from 345p to 335p, but said that the recent collapse in the share price triggers a lift in its recommendation from 'sell' to 'hold'."That said, given a weak financial outlook, RBS remains our least preferred UK bank. We think it is time to take profits on naked shorts, but we are unwilling to go further than that."The stock was up 0.6% at 326.84p in morning trade on Thursday.BC