RBS Braces For No-Deal Brexit, Seeks German Banking License
Zacks Investment Research | Dec 26, 2018 02:39AM ET
In a move to prepare itself against no-deal Brexit, The Royal Bank of Scotland (LON:RBS) PLC (NYSE:RBS) applied for a German banking license to make sure that the company can freely trade across the region. The news was reported by The Financial Times.
Per the article, RBS plans to convert the current Frankfurt branch into a regional “payments hub” that will be able to process and settle euro-denominated payments, and give loans to large German clients along with taking in deposits.
Moreover, the state-owned bank has started to make preparations for the move. It plans to hire about 12 employees, which would include treasury and local regulation specialists.
Though the move applies to all subsidiaries, RBS expects it to have an impact on NatWest Markets N.V only as it trades across the bloc. Notably, RBS already has a Dutch license, which it had acquired along with ABN Amro before the crisis. With this license, the company will be able to operate freely across the European Union (“EU”).
Early December 2018, the bank disclosed that it had put forth request to the regulators to allow it move about £6 billion of assets and £7 billion of liabilities to NatWest. This is expected to impact nearly 30% of customers in NatWest markets.
In case a deal is struck between Britain and EU, the transfer of assets would be a slower process and be “subject to further political developments,” per the bank.
Overall, Frankfurt seems to have been a favorite for majority. About 30 of the 37 U.K.-based financial institutions that have applied for licenses to the European Central Bank have picked Frankfurt as their EU base.
Notably, RBS is on its road to recovery. In August 2018, the company declared its first dividend post 2008 crisis, which led to boost investors’ confidence. However, heightened competition, volatility in the global economy and litigation costs are some major concerns surrounding the company’s growth.
Shares of RBS have lost 23.1% over the past six months compared with 10.7% decline recorded by the industry it belongs to.
Zacks Rank & Stocks to Consider
The stock currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same space are ICICI Bank Ltd. (NYSE:IBN) , Oversea-Chinese Banking Corporation Ltd. (OTC:OVCHY) and HDFC Bank Ltd. (NYSE:HDB) , carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Get The News You Want
ICICI Bank’s Zacks Consensus Estimate for 2018 earnings has remained stable over the past 60 days. In two years’ time, the company’s shares have gained 46.4%.
Oversea-Chinese Banking’s Zacks Consensus Estimate for 2018 earnings has moved 4.3% upward in the past 60 days. Also, share price of the company has increased 27.4% in past two years.
HDFC Bank’s Zacks Consensus Estimate for current-year earnings has been revised 1.5% upward over the past 60 days. Also, the company’s shares have risen nearly 64% in the past two years.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.