The Royal Bank of Scotland (RBS) is a retail and commercial bank based in Edinburgh, Scotland. Founded in 1727, it is one of the oldest banks in the world. It has been a major player in the Scottish banking industry, and at a point in 2008, was the largest bank in the world by assets. However, it was hit hard by the 2008 global financial crisis and has since then undergone restructuring to become one of the “Big Four” in Scotland, a term used to refer to the biggest four banks in Scotland.
The RBS bank acquired the National Westminster Bank (or Natwest Bank) in 2000 for £21 billion. The acquisition was part of a larger consolidation of the UK banking industry, which was driven by the need for banks to become more efficient and competitive in the face of increasing globalization and technological change. At the time of acquisition, RBS was the biggest bank in the UK, and the Natwest Group was the second-biggest. In 2020, the Royal Bank of Scotland Group announced that it would be changing its name to NatWest Group, reflecting the fact that the NatWest brand is more widely recognized and used by customers.
Buying Royal Bank of Scotland shares can be a valuable investment for retail investors all over the world, with the right investment mindset and tools. This guide will go through how to buy Royal Bank of Scotland (NWG) shares for retail investors, look at the pros and cons of buying shares in RBS, factors to consider (CFDs, fees, commissions, etc.), and an insight on what retail investors on the internet think about buying shares with the bank.
Buying NWG shares is as simple as following the few steps below:
- Select an Online Stockbroker
- Create a Brokerage Account
- Deposit Funds
- Buy RBS Shares
- Manage your RBS Positions
Some of the benefits and downsides of buying shares in Royal Bank of Scotland are:
- Good for Portfolio Diversification
- Moderate Cash Dividend Payments to Investors
- High Growth Potential
- Sensitivity to Interest Rates
Buying all kinds of shares comes with some level of risk and requires deliberate consideration, and NWG is no different. Here are some factors to consider when buying NWG shares:
Commissions & Fees
Buying shares is not free. The brokerage platform you use to purchase the shares will charge some fees and commissions for using their service and making certain transactions. Some will come in the form of spreads, which is the price difference between the buy and sell price of an asset. Other fees can be direct commissions, deposit/withdrawal fees, etc.
Stock Brokers Regulation
Check that the stock broker is regulated in your country. If you live in Scotland or any part of the UK, the Financial Conduct Authority (FCA) is the body responsible for regulating stock brokers registered there. Check the FCA website to confirm that the broker is registered with them. Other bodies include the ASIC for Australia, the FINRA and SEC for the United States of America, and so on.
A trading platform is a computer software that gives brokers access to the stock market so that you can buy NWG shares. Broadly speaking, there are two classes of trading platforms: proprietary trading platforms and third-party trading platforms. Proprietary trading platforms are customizable platforms for the brokers that create them and are offered exclusively to traders registered with the brokers. Third-party trading platforms are more generally used and common across different platforms.
Research the trading platforms offered by the brokers you wish to trade with and see if they are convenient for use. You can test it out with a demo account.
Leverage trading allows traders to open positions larger than they would be able to with the funds in their trading account. In other words, leverage allows you to borrow money and trade bigger positions. If you are interested in leverage trading, check to confirm that your broker offers leverages for trading NWG shares and that they are in line with the regulations. In the UK, the FCA regulation limits leverages on single stock equities like NWG shares to 1:5.
It is also important that you check if a broker offers CFDs. CFD trading is a method of speculative trading that involves trading on the price direction of an asset without owning the asset. You need leverage to trade CFDs, so keep that in mind when doing your research on the broker you wish to trade with.
RBS Stock Performance
Do a little market research to find out how the Royal Bank of Scotland stock has performed in the last year, last ten years, and other important periods. Compare this performance with the performance of the stock market in general and the performance of other similar stocks. It is also important to study what have been the drivers of the stock price in recent times. Research about events that could potentially have an effect on the stock price in the future.
RBS Past Dividends
You can go through the dividend history of RBS shares on a site like dividend.com. You can use this information to estimate how much you could potentially earn in dividends when you buy NWG shares.
As mentioned earlier, a trading platform is software used by brokers to access the stock market. Brokers will often offer a proprietary platform, a third-party trading platform like MetaTrader and cTrader, or a mixture of both.
These brokers will allow you to access these trading platforms on desktop and mobile devices.
Desktop Trading Platforms
Desktop trading platforms are proprietary and third-party trading platforms that are available on desktop devices like PCs and Macs. You can access these platforms either by downloading computer software on your desktop or using a web link.
MT5 is the most used desktop trading app to trade stocks because of the tools it offers for great fundamental and technical analysis, but you can also use MT4 and cTrader, or other proprietary platforms like the eToro trading platform and Capital.com trading platform.
Trading platforms also exist as mobile apps on your smartphones, tablets, and other mobile devices. Just like desktop trading platforms, you can have proprietary platforms like the eToro mobile app or third-party trading platforms like MetaTrader (MT4 and MT5) and cTrader on your mobile device.
Mobile trading apps offer the same trading experience as the desktop platform to retail traders on their mobile devices and allow them to trade on the go, meaning they don’t have to be limited to a physical location.
Buying NWG shares could come with extra charges apart from the trading capital. Depending on the broker, there are different fees and commissions you pay when trading Royal Bank of Scotland shares. These fees and commissions can be broadly categorized into trading and non-trading fees.
Trading fees are fees you pay when you engage in trading on a brokerage platform. You have to actively trade before you can be charged a trading fee, leaving your account dormant won’t incur any trading fees. Examples of trading fees are:
Spread: Spread is the difference between the ask and bid price of a trading instrument. Commission-free brokers often add a small price markup on the buy and sell price of assets to serve as a fee for providing liquidity on their platform.
Commission: Some brokers prefer to charge a direct commission for offering liquidity and access to the stock market, as opposed to using spreads. Brokers like eToro and Capital.com are commission-free, meaning they don’t charge commissions for trades you carry out on their platforms.
Overnight Fees: Overnight fees are fees incurred on your account when you hold a leveraged trading position overnight. They are interests charged on the money borrowed to hold that leverage position and vary depending on the broker.
Non Trading Fees
Non-trading fees are fees incurred on your trading account without directly trading. They are fees you have to pay even when you don’t directly trade or buy NWG shares. Some examples of non-trading fees are:
Inactivity Fee: You pay inactivity fees on your account if you leave your account dormant for an extended period of time, usually 3 months or more. eToro charges you an inactivity fee of $10 per month after inactivity in your account for one year.
Conversion Fee: You may need to convert currencies if you wish to make deposits to your trading account with a currency that is not the trading currency approved on a brokerage platform. Some brokers like eToro and Capital.com charge a fee for currency conversion, often a small percentage of the amount you wish to convert.
Deposit and Withdrawal Fees: Brokers might charge you a small amount for depositing and withdrawing money to and from your trading account. Some brokers do not charge this fee.
It is important to go through the broker’s website to see specific information about their method of charging traders for trading on their platform. All trading and non-trading fees are available on their website. You can also reach out to their customer support if you are still unsure.
About Royal Bank of Scotland (NWG)
The Royal Bank of Scotland is one of the oldest and biggest banks in the United Kingdom and the world. Founded in 1727 in Edinburg, Scotland, RBS has played an important role in the Scottish and British economies throughout its existence. The bank has also played a key role in the development of the modern banking system. In the 18th century, the Royal Bank of Scotland invented overdrafts, which was an important step in the establishment of the credit system available in most developed nations today.
In 2000, RBS acquired NatWest in a £21 billion deal, making it the largest takeover in British History at the time. The acquisition was completed on 10 August 2000, with a motivation to create a larger, more diversified banking group with a stronger presence in the UK and international markets.
The bank’s stock has performed relatively poorly since the acquisition, with a total return of -68% over the past 20 years. The total number of shares in circulation is 3.9 billion. The current share price of the stock is 221.61 pence.
According to data from Disfold.com, the Royal Bank of Scotland (NatWest Group Plc.) has a market cap of $31.83 billion, making it the 496th largest company in the world, and the 22nd largest company in the UK. The company had its peak market cap at around 2007/08, even becoming the largest bank in the world by assets in 2008. However, the 2008 global financial crisis hit the bank hard, and it hasn’t recovered to the point of peak value.
We went through some social communities to find out what people thought about buying NWG shares. We compiled some of the most important comments containing what people think about the bank’s shares from Reddit and Quora, two of the biggest internet forums.
Reddit is one of the largest social communities in the world, with over half a billion users (called Redditors). Redditors discuss every topic from politics to sports, entertainment, and finance. We combed through the platform to find specific comments on buying shares in RBS and what retail investors thought about it.
We couldn’t find exact Reddit posts talking specifically about NWG shares, but we found a few threads where Redditors talked about bank stocks and how to analyze bank stocks like RBS to know if they are good for trading.
We found a thread on r/investing where a Redditor wanted to know what to look out for when analyzing bank stocks. They wanted to know the specific metrics which are of outsized importance in bank functioning, and what can be ignored in looking at banks which shouldn’t be ignored elsewhere.
One Redditor advised that the Original Poster (OP) should focus on the bank’s Return on Equity or ROE. The return on equity is how much profit a bank makes for every dollar of shareholder’s money. According to the Redditor, if a bank can earn at least 8% ROE, which is the typical return that equity investors expect, it should trade at or near its book value. Book value is the value of a company’s assets minus its liabilities, and it is one way to estimate the value of a bank. Although there are many ways you can value bank stocks, ROE and Price-to-Book are what most will focus on.
Another Redditor told the OP to focus on the current interest rates when considering buying bank stocks like RBS since banks benefit a lot from high-interest rates. The higher the interest rates, the more money banks can make by charging it on loans. This is because the spread between the interest they pay to borrow money and the interest they charge to lend it increases. Also, the Redditor advised the OP to look at a bank’s loan loss provisions. If loan loss provisions are increasing, it may indicate that the bank is anticipating more loan defaults, which could negatively impact its financial health. Conversely, if loan loss provisions are decreasing, it may indicate that the bank is more optimistic about the ability of its borrowers to repay their loans.
Quora is another large social community with over 300 million active users monthly. Like Reddit, users of this forum discuss all engaging topics around the world. We went through many Quora pages to find out what people thought about buying NWG shares and bank shares in general.
On Quora, the first thread we saw was from a user asking others what they thought about the future of the Royal Bank of Scotland shares. Another user responded by stating that RBS was owned by the NatWest Group, which has the UK government (specifically the HM Treasury) as its majority shareholder. According to the user, the government will only share the shares when they think it is profitable, implying that it is important to watch government action on NWG shares to determine when would be a good time to buy or sell the shares.
The Royal Bank of Scotland is one of the oldest banks in the world and currently one of the largest in the UK. It was founded in 1727 and has since then played a major role in the Scottish banking industry, increasing its value in the eyes of many investors. It is listed on the London Stock Exchange and the New York Stock Exchange, making it open to traders in most countries all over the world.
This article is a guide on how to buy Royal Bank of Scotland (NWG) shares for traders in the UK, Australia, Germany, UAE, and other countries in the world. To buy NWG shares, you need to follow a few steps. This includes selecting an online stock broker, creating a brokerage account, searching for the stock’s ticker symbol (NWG), and buying it. You can also manage your position on the online brokerage platform.
When choosing a broker, it is important you look out for some important factors like the stock broker regulation, the commission and fees offered by the stock broker, the trading platforms available, and the leverage availability. Before you start trading NWG shares, you need to look out for its recent stock performance and past dividends. Compare this with other stocks and the stock market in general. This helps you understand if the shares are good for your portfolio. There is other important research you need to do on the bank’s market performance and financials before you start trading their stocks.
Q & A
The Royal Bank of Scotland (RBS) has its headquarters in Edinburgh, Scotland, United Kingdom. There are over 700 RBS branches all over the world, with the bank having a major presence in Scotland and the UK in general. It also has branches in several other countries like the US, Canada, and other countries in Europe and Asia.
The Royal Bank of Scotland was founded in 1727 in Edinburgh, Scotland by a group of 30 businessmen, led by Sir John Hepburn, who was a prominent merchant in Edinburgh, Scotland. The Royal Bank of Scotland was granted a royal charter by King George I in 1727, giving it the authority to operate as a banking institution in Scotland.
According to the RBS website, the aim of RBS is “to champion the potential of people, families, and businesses.” They aim to help people make sustainable choices through saving and budgeting.
His Majesty’s Treasury, the UK’s Department of Treasury is the largest shareholder of RBS, with a 42% equity ownership. Other large shareholders are Norges Bank Investment Management (3.33%), MFS International (UK) Ltd. (1.92%), and The Vanguard Group, Inc. (1.75%).
RBS struggled to make a profit after the 2008 financial crisis, posting its first profit in 2018. However, it has since been profitable, although its profits reduced significantly during the COVID-19 global pandemic.
The Royal Bank of Scotland (RBS) became a publicly traded company on the London Stock Exchange (LSE) on October 10, 1983.
The current price of NatWest Group shares is 261.80 pence.
The minimum amount you can invest in RBS shares depends on the stock broker or investment platform you use. For example, on eToro, the least amount you can invest is $10.
According to financial details from the company, NatWest Group has 4,844,696,970 outstanding shares.
The current total market cap of NWG shares is £14.877 billion ($18.685 billion).
You can buy RBS shares by opening an account with a regulated stockbroker with access to the London Stock Exchange or the New York Stock Exchange.
Buying RBS shares is mostly a matter of personal choice and strategy. It is important you do your diligent research on the share when you want to buy and see if it is the right fit for your portfolio.
Yes, the UK government is a majority shareholder in RBS.
RBS shares reached its all-time high of £7,800 on 19th February, 2007.
You can buy RBS shares from online stock brokers on your smartphone or desktop device. Find a stockbroker with access to the London Stock Exchange, and search for The NatWest Group (NWG) stock and purchase it.
Yes, there are many brokers like eToro and Capital.com that offer commission-free trading accounts for buying NWG shares.