Royal Bank of Scotland’s (RBS - Free Report) recent decision to close a number of branches with a view to control expenses attracted widespread criticism. Following this, the bank has agreed to delay closure of 10 of the 62 Scottish branches.
However, the decision is only temporary and will be reviewed again in 2018 to find whetherthe branches have been able to attain a “sustained and viable increase” in both transaction volumes and income.
The bank promises to be fair to the review findings and act accordingly. If the review finds that a smaller number of branches should stay open, then the recommendation will be accepted.
Apart from this, the Royal Bank of Scotland will not be conducting further reviews on its Scottish branch networks until 2020.
The CEO backed its move to close so many branches with the changing customer preferences to digital modes of banking. Further, the closing of branches would also help the state-backed bank to cut costs and compete with othergrowing digital lenders.
The bank has reached the most impending settlement with the U.S. Justice Department over residential mortgage-backed securities probe dating back to 2005. It is required to pay $4.9 billion in penalty to the regulator. Also, this settlement has cleared the way for the U.K. government to sell its nearly 71% stake in the bank.
Royal Bank of Scotland’s diversified business model and commitment to improve financials are likely to support its overall growth in the near term. Though the legal settlementwill enable the bank to distribute dividends among shareholders, it is likely to create a dent in its financials.
Shares of Royal Bank of Scotland have gained 12.8% over the past year, outperforming 5.4% growth recorded by the industry.
The stock currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Lloyds Banking Group plc (LYG - Free Report) sports a Zacks Rank #1 (Strong Buy). Its earnings estimates for 2018 have been revised slightly upward over the last 60 days. Also, its shares have gained 2.9% in the past six months.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Bank of N.T. Butterfield & Son Limited (NTB - Free Report) has witnessed 4.1% upward estimate revision in the last 60 days. In six month’s time, the company’s shares have gained 33.3%. It carries a Zacks Rank #2 (Buy).
Bank of Montreal (BMO - Free Report) carries a Zacks Rank of 2. The Zacks Consensus Estimate for the company has witnessed 0.4% upward estimate revision in the last 60 days for the current year. Its share price has gained 0.7% in the past six months.
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