Brokers Investec have said it would be a mistake for the government to initiate a sell-down of RBS shares at the current price, as they are undervalued.

Reports yesterday suggested the government may bring forward the first sale of shares to institutions to avoid a clash with the Lloyds sell-off. But analyst Ian Gordon says the current RBS share price now carries "an exaggerated uncertainty discount" for outstanding conduct issues which should unwind over the next 12 months, which should also see "very material progress with the group's restructuring programme" and potentially a £10bn share buyback. Mr Gordon says the Chancellor should not to sell now at 350p when he declined to begin selling in February at above 400p. Investec says RBS is its only 'buy' among UK banking stocks, with a price target of 395p.