10 May 2018
Royal Bank of Scotland Group Plc (RBS.L) said on Wednesday it had agreed to pay $4.9 billion to resolve a U.S. Department of Justice probe into its structuring and sale of mortgage-backed securities ahead of the 2008 financial crisis.
The British state-backed bank said that $3.46 billion of the proposed civil settlement will be covered by existing provisions and the bank will take a $1.44 billion incremental charge in 2018’s second quarter to cover the rest.
The accord would resolve a major issue that has weighed on the company’s share price and complicated the UK government’s plan to sell down its more than 70 percent stake in the bank.
RBS Chief Executive Ross McEwan called the deal a “milestone.”
“Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer,” he said in a statement.
The U.S. Attorney’s Office in Massachusetts, which led the probe, confirmed it had reached an agreement in principle with RBS that would resolve potential civil claims related to mortgage-backed securities that were issued from 2005 to 2008.
“Further details remain to be negotiated, however, before a formal agreement can be reached,” the office said.
– By Nate Raymond, Eric Walsh, Reuters, 10 May 2018
Link to Reuters.
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