Broker snap: RBS is Nomura's least-preferred UK bank

25th Jul 2012 10:28

Nomura has maintained its 'reduce' rating for UK lender Royal Bank of Scotland (RBS) saying that uncertainties surrounding the business still remain."We remain negative on RBS (and Lloyds) given the uncertainties of restructuring in a deleveraging environment, the need to build capital to meet new regulation and turnaround the economic losses in capital markets," the broker said on Wednesday.The broker highlighted that core businesses continued to shrink in the first quarter, "a trend we see likely to continue as long as the private sector keeps deleveraging."This means the terminal value of RBS, which the bulls aim to capture, is falling further."Meanwhile, the group has also been affected by the recent volatility in the sector sourcing from the LIBOR investigations, swap mis-selling, PPI and the APS scheme, as well as the impact from IT issues (specific to RBS).This, as well as the weak capital markets outlook, means that RBS is Nomura's least preferred name among the UK domestic banks in the near term.By 10:28, shares were trading 2.1% higher at 200.74p.BC