Could Royal Bank of Scotland Group Plc (LON:RBS) go the way of Deutsche Bank? Unlikely, according to City analysts.
However it does face more than a rap over the knuckles from the US Department of Justice.
That’s the same body that meted out a £10.5bn fine to the German giant for its part in fuelling the housing bubble that created the 2008 financial crisis.
US lawmakers have accused Deutsche, RBS and others of bundling up poorly underwritten home loans and misleading investors by selling them as safe securities.
Today, banking analysts at Berenberg have put an estimate on RBS’s potential liabilities of £9bn, though they think the Edinburgh-based group has enough spare cash to absorb the hit.
Although resilient, RBS is stuck in a rut, according to Berenberg, which cut its valuation on the high street lender by 50p a share to 200p – which still represents a decent premium to the current share price.
“While the bank does face material macro-driven headwinds, it does so from a position of relative strength,” it told clients in a note.
“In our view, RBS has a strong core business, a focus on cutting costs and, due to substantial de-risking, one of the safest loan books of any UK bank.”
While being broadly positive on RBS, Berenberg recognised market sentiment is currently running against the state-controlled group.
Of the 15 analysts polled by the Broker Forecasts site, only three are ‘buyers’ of RBS stock.
Meanwhile in the last six months, the consensus price target has ebbed from 316p to 221p currently.