Newspaper article The Evening Standard (London, England)

Fresh Blow for RBS as SocGen Trims Its Target

Newspaper article The Evening Standard (London, England)

Fresh Blow for RBS as SocGen Trims Its Target

Article excerpt

Byline: HUGO DUNCAN

ROYAL Bank of Scotland was today rocked by an untimely downgrade fromSociete Generale, just a week ahead of its [pounds sterling]12 billion emergency rights issue.

SocGen reiterated its sell rating on RBS and cut its target price to 200pthe very price at which the fund-raising has been pitched to the City.

Analyst Asheefa Sarangi said: "We believe that question marks over strategy,long-term growth and management credibility will continue to result inunderperformance of RBS shares." The main concern was not that the rights issuewill failit is underwritten by Merrill Lynch, Goldman Sachs and UBSbut that RBS will not find a buyer for its [pounds sterling]7 billion Direct Line and Churchillinsurance business. Three bidders have already withdrawn from the auction.

RBS was the most heavily traded stock in London for the second day runningagain outstripping Vodafoneas the shares edged up 1/2 p to 232 1/ 4 p, having hit an eight-year low lastnight. Pressure is mounting on chief executive Sir Fred Goodwin, and there aregrowing concerns that the underwriters will be left holding millions of pounds'worth of stock following the rights issue.

The troubles at RBS have done little for HBOS and Bradford & Bingley ahead oftheir own proposed rights issues. HBOS shed 4p to 410 1/ 4 p and B& B fell 1 .4 p to 90 1/ 4 pjust above its 82p issue price. The FTSE 100 index gained 18.4 points to 6086.5but the Dow Jones tonight fell 5.5 points to 12,640.8.

Shares in London were led higher by a near-10% rise in British Airways.

The flag carrier was up 21p at 236p following the collapse ofbusiness-classonly rival Silverjet.

EasyJet gained 9p to 304p but Ryanair was unchanged at e 2.73 after UBS warnedthe price of crude, and in turn fuel, is still hitting profits, and downgradedthe stock to neutral from buy. …

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