LONDON -- Royal Bank of Scotland Group   is back in the headlines again, thanks to a new round of lawsuits from investors. They feel that the bank misled them when they participated in a 12 billion pounds rights issue in 2008, only to see the value of their shares plummet a few months later, when the bank was bailed out.

RBS's share price is down by 25% from its January peak of 367 pence. As I write, you can pick up RBS shares for less than 280 pence -- and I reckon that's a good deal.

Forget the lawsuits
The latest lawsuit to hit RBS comes from the RBoS Shareholders Action Group, which says that RBS may have to pay them 4 billion pounds in compensation for their losses.

Maybe. But I suspect it won't, and claims like this usually rumble on for years before reaching any conclusion. Whatever the outcome, I don't believe it will affect Royal Bank of Scotland's recovery prospects.


6 billion-pound capital shortfall?
Last week, a Bank of England report into U.K. banks found that they had a collective capital shortfall of 25 billion pounds. The BoE didn't release a breakdown, but most analysts believe that RBS is worst affected, and may have a shortfall of 6 billion pounds.

Although this does need addressing, it isn't urgent and will probably be dealt with by retaining profits and postponing dividend payments a little longer. Discussing the report, BoE Governor Sir Mervyn King, said that the problem was "perfectly manageable" and "is not an immediate threat".

Pay 63 pence for 1 pound
The shares of a healthy bank would normally trade at or slightly above its book value. But at 280 pence, RBS shares are currently trading at just 0.63 times the bank's tangible book value, which I think is a great opportunity for value investors.

The main risk is these assets may fall in value, or that RBS will sell some of them to raise cash. So what can we expect?

Last year, the bank's net tangible asset value per share dropped from 501 pence to 446 pence, as it scaled back some of its operations and disposed of non-core assets. RBS expects 2013 to be the final year of restructuring so, assuming a similar performance to last year, RBS may be left with 400 pence of tangible assets per share.

At a share price of 280 pence, this still gives a potential upside of nearly 25% for new investors.

A safer alternative?
If you want to diversify away from the U.K.'s bailed-out financial sector, then I have another suggestion.

This company outperformed the FTSE 100 by 32% in 2012, and has delivered 44% earnings-per-share growth since 2009. It's already ahead of the wider market in 2013, too.

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The article It's Time to Buy Royal Bank of Scotland originally appeared on Fool.com.

Roland does not own shares in Royal Bank of Scotland Group.  The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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