Market report: RBS is back in credit after settling shareholders’ case

Investors in Royal Bank of Scotland breathed a sigh of relief today with the lawsuit seemingly behind the bailed-out bank.

The group representing thousands of RBS shareholders claiming over the disastrous rights issue in 2008 indicated yesterday it would settle the remaining claims for around £200 million.

Including legal costs of over £100 million, the final bill is now around £1 billion.

The deal may have ended hopes of getting disgraced former chief executive Fred Goodwin on the stand, but Investec’s banking analyst Ian Gordon says it’s good news for beleaguered shareholders.

He upgraded his rating on RBS from Sell to Hold, arguing while RBS is still “not cheap” after a minor share sell-off in recent weeks, the settlement “has disposed of a major ‘distraction’”.

RBS led the risers on the FTSE 100, climbing 5p, or 2%, to 256.7p. Polls showing a narrowing lead in recent days for the financial services-friendly Tories had weighed on banking and insurance stocks, but Barclays rose 3.4p to 212.9p and insurers Legal & General and RSA were up 3.6p to 254.6p and 7.64p to 615.64p. The sector’s rise lifted the FTSE 100 17.41 points to 7542.36.

Traders saw a return to buying after yesterday’s sell-off for consumer stocks. One market-maker said he expects a rally from “the bombed-out retail sector” if Prime Minister Theresa May wins a big majority.

Panther Securities, the property firm run by Ukip donor Andrew Perloff, was unmoved at 325p after exchanging contracts to sell a site that housed the Girl Guides in Birmingham for £11 million amid planning delays.

“I suspect many of the Girl Guides who used the property when our original talks began will now be grandmother Guides,” he said.

On the alternative market, Shoe Zone plunged 9.51p, or 5%, to 177.99p after a weak first half from the cheap shoes retailer cast doubts as to whether it would meet its full-year targets.

Among the punters’ favourites, virtual-reality gigs firm EVR Holdings edged down 0.38p to 8p after a £5 million share placing at 8p a pop, while Irish oiler Providence Resources surged 1.25p, or 8%, to 16.25p after tie-ups with French major Total.