According to Morgan Stanley it was.
Writing on Friday, analyst Michael Helsby claimed the intra-day low of 145p seen during Wednesday’s tumultuous session could mark the nadir for RBS.
Shareholders who stumped up £12bn at 200p a share in June will certainly be hoping the MS man is right.
We remain Overweight RBS as we feel the bottom was plumbed at the 16 July intra-day low of 145p, valuing it at 1.5x P/GOP and 0.85x P/TNAV (0.65x post disposals). Concerns on the UK economy, the quality of the US loan book, monoline exposure and general financial systemic issues in the US have driven the share down by 50% since 23 April; and with it now down 77% from the 2007 peak we believe further structured credit write-downs and a 90′s style recession is priced in
Apparently, the fact that RBS is just a large US regional bank with some high street assets in the UK and continental Europe is nothing to worry about either.
US concerns look overdone, with RBS’ quarterly filings showing a superior quality loan book than many peers, no direct exposure to sub prime and monoline marks taken at ~47%.
While UK risk remains, RBS has not grown as quickly into this downturn as in 1987-89 and large parts of its other commercial book are to larger corporates less affected by the credit crunch.
Shares up almost 4.2% at 186.6p during early trade. Only another 14p and they will be back at the rights price.
Related links:
Poor RBS – FT Alphaville
Save Fred Campaign (an occasional and reluctant series) – FT Alphaville
Sir Fred Goodwin 2001-2008 – FT Alphaville