‘Humbling’ US settlement clears crisis-era hangover for RBS
Deal clears the way for UK government to start selling down its more than 70% stake
The $4.9bn settlement was much lower than expected; analysts had estimated a fine of up to $12bn. Photograph: Alastair Grant/AP
Shares in Ulster Bank parent Royal Bank of Scotland rose as much as 6 per cent on Thursday after the bank reached a $4.9 billion settlement with US authorities, opening the way for its privatisation and return of cash to taxpayers who bailed it out in the financial crisis.
The fine, much lower than expected, resolves a US Department of Justice investigation into the British bank’s sale of mispriced mortgage-backed securities in the run-up to the crisis and clears one of its most debilitating hangovers from that era.
“It’s very humbling to have to announce a settlement of this magnitude,” the bank’s finance director, Ewen Stevenson, told reporters.
The agreement clears the way for RBS to restore its dividend and for the UK government to start selling down its more than 70 per cent stake.
RBS executives said it would take a few weeks to finish the paperwork, but the total penalty was unlikely to increase. Analysts had estimated a department fine of up to $12 billion.
RBS said it would be able to cover the bulk of the penalty out of existing provisions alongside a $1.44 billion charge it will take in the second quarter of this year. – Reuters