Exane upgrades RBS on attractive risk/reward

Over the last year, the bank has maintained a relatively cautious investment stance on RBS.

It said that despite the appeal of the restructuring story and potential excess capital, its concern was that the eventual earnings power of the bank was likely lower than many thought.

However, with the share price down 20% since the start of 2015, a greater appreciation of the medium-term prospects for earnings, and substantial improvements in the balance sheet over the last 10 months, Exane turned more positive on the stock.

“We have not significantly changed our view on the earnings power of RBS or the eventual excess capital, but do believe the current share price offers investors a good balance between risk and reward given the floor provided to the valuation - at around 280p - courtesy of balance sheet strength.”

At 1255 GMT, RBS shares were up 1% at 320.80p.