Royal Bank of Scotland Group Plc rose to a one-year high after the bank said it will scrap the planned sale of its Williams & Glyn consumer-banking unit.
The shares gained as much as 6.4 percent and were up 11.2 pence to 254 pence as of 8:58 a.m., the highest among British banks in London trading on Monday.
Investors are optimistic that RBS is closer to resolving some of the biggest issues that have weighed on the stock, even if it means short-term losses. The bank will take a 750 million-pound ($930 million) provision as part of a new plan to address its European Union mandate to sell Williams & Glyn. That adds to a fourth-quarter loss that will also include a 3.1 billion-pound charge tied to a U.S. probe into sales of mortgage securities.
â€œAddressing these non-operating issues in 2017 should provide a clearer path towards the normalization of the business, and also brings forward our expectations of dividend resumptionâ€ to the end of 2017, Rohith Chandra-Rajan, an analyst at Barclays Plc, wrote in a note to investors. The bank was raised to equal weight from underweight by Barclays.
RBS has struggled to spin off Williams & Glyn, which it agreed to do after receiving 45.5 billion pounds of state aid during the financial crisis. The European Commission is now considering allowing the Edinburgh-based lender to keep the unit and instead set aside money to enhance competition in business banking, RBS said.