Mon. May 25th, 2020

Business Ideas UK


RBS agrees £3.6bn settlement with US over mortgage probe

Royal Bank of Scotland agreed to pay $4.9bn (£3.62bn) to settle a US Department of Justice probe into its packaging and sale of mortgage-backed securities before the 2008 financial crisis

The tentative agreement means the government-owned bank would need to take a $1.44bn charge in the second quarter to pay the penalty. The rest will come from money it has already set aside.

It moves the bank a step closer to shake off government ownership. The government, which owns 71% of the RBS, paid $45.5bn to bail out the bank after the financial crisis.
RBS Chief Executive Ross McEwan said this was a “milestone moment for the bank”.
“Reaching this settlement in principle with the US Department of Justice will, when finalised, allow us to deal with this significant remaining legacy issue and is the price we have to pay for the global ambitions pursued by this bank before the crisis.”
The bank warned that the agreement was subject to the Department of Justice (DOJ) and RBS entering into a legally binding agreement.
RBS is the latest bank to settle claims of mis-selling in the run-up to the financial crisis. Barclays agreed to a $2bn (£1.4bn) settlement with the DOJ in March.
“Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer,” McEwan said.
With the penalty paid, RBS can now open talks with UK regulators about the resumption of dividend payments. That would allow funds that only invest in dividend-paying stocks to invest.

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It may also allow the UK Chancellor Philip Hammond to sell a stake in the bank.
The company’s stock rose 4% in early trading.

Source: Sky

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