Economy
RBS shares overvalued say brokers |
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| Economy | |
| Written by Paul Williams | |
| Tuesday, 07 September 2010 | |
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RBS and other major UK banks suffer on European banks exposure to risky government debt.
RBS (LON:RBS) shares are overvalued at current levels say the equity analyst team at brokerage WestLB Equity Markets. RBS shares are currently trading 1.94% lower at 46.04 at 1500 in London. FTSE 100 banking stocks, and indeed other financial stocks, have suffered after reports suggested European banks are not as fit as generally believed. Analysis by The Wall Street Journal found the stress tests understated some banks' holdings of "potentially risky government debt." Also, the limited nature of the disclosures made it almost impossible to gauge the number of banks that had excluded portions of sovereign portfolios from their filings, or the overall effect of doing so. The report also weakened the euro, lifted German bund prices and increased "peripheral" European bond yield spreads over bunds. With the point of the stress tests effectively undermined, the Stoxx Europe 600 index for the sector fell 1.2%, while Societe Generale and Credit Agricole dropped 3.2% and 3.1%, respectively. Barclays declined 3.1% after the bank said Bob Diamond will succeed John Varley as chief executive. In the European foreign exchanges, the euro dropped following the WSJ report on Europe's bank stress tests. The single currency was trading at $1.2752, down from $1.2876 late in Europe on Monday, and at 106.96 yen compared with 108.48 yen. The dollar was at 83.91 yen, down from 84.21 yen, despite President Obama's $50 billion infrastructure plan to jump start job creation in the U.S.
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