I've long admired Fred Goodwin and a highly capable exec team at Royal Bank of Scotland. While their peers talk a good game they are busy making things happen. The company have a core strategy of growing through acquisition and today's news will take then immediately into a scale (top10) position in the US market..a market that is certainly competitive but that can also benefit from the insights to be gained from RBS's retail arm. The productivity plays will also undoubtedly come in (just as they did at NatWest) and you would have to bet that this is the team who can succeed in the US where others have erred notably Midland/HBSC. A key play has been to retain the Charter One US CEO, Bud Koch. True they now need to make things happen but it's a bold step and one that overtly heads into the reality that today there are no bargain basement prices on good quality US banks.

There are more acquisitions in the pipeline for RBS and the market jitters that have seen the share price drop 5% (at 1630) at time of writing represent a great defensive mid-term. The decsion to raise capital via a public placement may have taken some of the gloss of the deal today but I see this as an opportunity to accumulate at an undervalued level...take a longer term view and this one stands head and shoulders over the crowd. They have the do-ability factor. Any other views out there.

Some analysts here think Royal Bank could table an offer of its own for Abbey should HBOS kick off an auction process. Banco Santander is not thought to have the capital strength to increase the cash component of its bid for Abbey in the event of a higher offer from HBOS. However, the Royal Bank share sale to lessen the Santander link would give it more flexibility to sweeten its offer should it find itself involved in an auction for Abbey. They still have the reserves to do so - also interesting to look at the high level of off market trades for Abbey stock today.

Ideally I would like to be able to come out of RBS by the end of the week as I will be away on a hol. whilst an Abbey takeover would be good In the long term, short term I don't think It would. So I'm really hoping I can get a decent rise before Friday.

joehargan: I think the competition mob would have a fit if RBS tried to buy Abbey (having already swallowed NatWest). It's only because HBOS is relatively small that they have a chance of being allowed to bid for ANL.

BTW, did you know that "Make it happen" is the tag line used by RBS. It's on the RBS pen I nicked from my Bank Manager's office in the City :)

Hitting 1600 in mid morning. This is a critical breakthrough point. Still long.

A first class company with impressive management.

IMHO this is a good time to pick some of these up.

A core hold in any serious portfolio. Track record of earnings and divi growth and excellent resource management.

TSQ.

Not tracking the index today - still up even though other banking
co's down.

Anyone got any opinions on RBS? I guess this stocks performance is heavily linked to whether you believe there will be more large acquisitions and integrations hitting profit margins in the shorter term. Plus whether the Bank of China investment will happen. Any views please post them cheers.

Any views on RBS. China investment is done. How are management now viewed?

John McEvoy
john@aravon.com

I think the China investment could not have been more favourable for the market if you take account of the fact they knew it was coming. A smaller stake than first expected. No new share issue to fund it. RBS are going to help guide BOC towards flotation in a number of areas. RBS are an international bank now with major exposure in the US. If the market was ever to view them in the same light as HSBC and thus value them as such the SP would rise considerably.

I hold half a unit, around 2.5% of RBS in my portfolio. If I became very positive on these I would increase this to 5%. I think management is well respected but are viewed as risk takers and I think this will have more a medium to long term effect on SP than short term. SP has gone nowhere this year although yield is reasonable and there is good support below current levels. I view RBS as a lower risk element of my portfolio, paradoxically because the risk taking approach of the management has already been built into the SP depressing it more than other banks. I think ultimately, a higher risk approach by management will lead to greater returns.

Many thanks sutherlh1 and captainmerton. perhaps Hbos trading statement will be catalyst. The graphs for RBS, Hbos, Lloyds last year rose December to February 2005. Perhaps history will repeat itself.

John McEvoy

Im really cheesed off. Over the last 3 weeks i have heard nothing but experts spouting that good times were ahead for rbs. not read one negative comment until the actual release the rns. How do these so called experts get it so wrong all the time.

Kivver,

This share will rocket when they announce a share buyback. It WILL happen eventually but you may have to endure a Sp underperforming the rest of the sector until it does.

Not in these personally, But I have been in a meeting that included an RBS mortgage exec. and they stated that RBS have problems of the nicest kind at the moment.
Their Intermediary arm has seen mortgage applications rise from 150 per day to 500 per day since their re-organisation of the 4 key brands and re-aim of their products. it is causing delays in processing, but its a nice problem to have.
Good luck anyone still holding. What I heard sounds very good.
Alan

as a follow up, I have had a look at what has changed on their proposition to intermediaries and they have some very attractive, possibly market leading products.

.

http://business.scotsman.com/index.cfm?id=190862006

Gut feeling is that because RBS have a fairly high proportion of what they do abroad, that this bit of bad news won't be to much of a share price detractor.

May even be a combined entry point/recovery play.

See what they do to the price on Wednesday I think.