Lloyds Share News (LLOY)

Analysts at Investec and Goldman Sachs now agree that shares of Royal Bank of Scotland [RBS] are a buy, but differ markedly on whether a hypothetical break-up of the lender into a so-called good bank and a bad bank is the correct way to proceed. Thus, the former today upgraded its view on the stock to buy (from hold) and raised its price target to 370p (from 350p), saying that the 'hurdles' to such an operation - as set out by the Chancellor at his mansion House speech - can be overcome. More specifically, for example, they point out that:1. Provisions and capital held against high risk portfolios enable RBS to potentially transfer assets to a bad bank at a 29% discount to notional without impairing the group's regulatory capital ratios.2. The transfer of high risk assets off the RBS balance sheet would front-load steady-state, facilitating an accelerated re-privatization process.They have therefore decided to incorporate a bad bank scenario into their Return-on-Equity/Cost-of-Equity [RoE/CoE] based price target for RBS - assigning a 51% probability to it, resulting in the aforementioned upwards price target revision. On Monday, however, Investec wrote to clients telling them that: "we would hope that the Chancellor will see sense and step back from the brink. Does he really wish to embark upon such a destructive course of action ahead of an election for no discernible benefit?"In the broker's opinion RBS's non-core book will soon be comfortably below £50bn. As well, it sees "core" RBS as a key beneficiary of the second quarter recovery in mortgage volumes - both financially (in terms of RBS' performance) and politically. RBS is also set to benefit from a rise in mortgage pricing, courtesy of the latest measures introduced by the PRA, they say, although Lloyds is expected tobe the main beneficiary.AB