Majority state-owned lender Royal Bank of Scotland (RBS) slips 3.9% to 320.5p after reporting a weak core operating performance. International banking, in particular, was very poor. This news overshadows that appointment of UK retail head Ross McEwan as chief executive officer.

McEwan replaces Stephen Hester, who stepped down in June due to continued friction with chancellor George Osborne regarding the direction of the bank. Hester?s resignation followed reported differences with the government over its plans to reduce RBS? international and investment banking operations to focus on UK lending.

It appears that the chancellor now has his man, complimenting McEwan for his vision of building RBS into a UK-centred corporate bank. The government?s break price for a privatisation is 503p a share.

Today's financial results once again dividend analyst opinion. Espirito Santo sticks with its 'sell' rating. Simon Willis, analyst at Daniel Stewart, doesn't have a stock recommendation but comes across bullish. He notes RBS' recovery is running behind that of Lloyds Banking (LLOY), reflecting its greater size and complexity. 'It will take time to adjust to the smaller scale of the markets business but this is reflected in the valuation,' he comments.

In the first six months of the year, RBS made a £1.4 billion pre-tax profit, compared to a £1.6 billion loss during the same period in 2012. However, it has increased its budget to compensation those it mis-sold payment protection insurance to £2.4 billion after allocating a further £185 million to the pot.

RBS? core tier 1 ratio increased to 11.1% and the bank is confident of achieving a Basel III core tier 1 ratio of more than 9% this year - it is currently at 8.7%. The bank says it is in a strong positioned to fund lending growth.

The government became an 81% shareholder in the bank five years ago when it spent £45 billion bailing it out after RBS went from a £10 billion profit to not having enough cash to put in its ATMs in less than 12 months. The bank expects its restructuring to be almost complete by the end of next year.

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Issue Date: 02 Aug 2013