Newspaper article The Evening Standard (London, England)

RBS Gains Ground as the City Looks to a Lift from [Pounds Sterling]10m Boss; MARKET ROUND-UP

Newspaper article The Evening Standard (London, England)

RBS Gains Ground as the City Looks to a Lift from [Pounds Sterling]10m Boss; MARKET ROUND-UP

Article excerpt

Byline: Mickey Clark

THE City expects big things from the new man charged with steering stateowned Royal Bank of Scotland back on the road to recovery.

Stephen Hester this week agreed a pay packet worth almost [pounds sterling]10 million, and now the City expects him to start delivering results in double quick time. Hester has a big following in the Square Mile and his appointment has not been lost on the likes of the Queen's own broker Cazenove, which has raised its rating on the shares from underperform to outperform.

It told clients today that it expects the shares to react positively to news of the expected restructuring of the bank, which is 70% owned by the taxpayer, as well as details of further appointments to strengthen the board and disposals.

The shares have made a promising start, helping to lead other blue-chips higher with a rise of 1.04p at 36.6p as more than 25 million changed hands in the first half hour of trading.

Shares generally made a lacklustre start with investors unnerved by the late sell-off on Wall Street overnight. The FTSE 100 index fell 23.86 to 4256.12. Among the leaders, package holidays operator TUI Travel received a welcome boost from Citigroup, which has raised its rating from hold to buy. The shares responded with a rise of 61/4p at 236p.

UBS has picked Rio Tinto, down 81p at 2050p, as its most preferred resources stock despite short-term selling on the back of its recent [pounds sterling]8 bil-liorights issue. It has repeated its buy rating with an A$70 target.

The broker says: "We believe that the conclusion of the refinancing of Rio's balance sheet will represent a substantial catalyst for the stock and as a result Rio will close the valuation gap between it and rival BHP Billiton." BHP shares fell 45p to 1350p.

Bank of America Merrill Lynch has raised its rating on Standard Life, up 4.3p at 183.1p, from neutral to buy. It also has a price target of 214p, which combined with a dividend yield of 7%, implies a total return on capital of 30%.

The broker says this proves attractive, given the lower-than-average risk profile of the life assurer. The shares have underperformed the sector by almost 30% since the March rally, with the share price actually falling. …

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