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RBS agrees to pay $4.9bn to settle U.S. mortgage securities case

Staff Writer |
Royal Bank of Scotland (RBS) has agreed to pay $4.9bn to settle a long running-investigation by the US Department of Justice into the bank's dealing in mortgage-backed securities before the financial crisis.

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RBS said $3.46bn of the penalty would be covered by existing provisions and that it would take a further $1.44bn charge in the second quarter.

City expectations for the size of the potential settlement had varied widely, with analysts having on average pencilled in ?2bn but some suggesting $9bn would have been plausible.

The extra charge will be booked at NatWest Markets, RBS's corporate and investment bank, which sits outside the ring-fence that splits retail and investment banking.

RBS expected to settle the case in 2017 but talks with the Department of Justice have dragged on.

Chief executive Ross McEwan said settling the case made it easier for investors to place a value on RBS.

The government wants to start selling its 71% stake in RBS, acquired in the banking bailout during the financial crisis, by March 2019.

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