Finance

RBS agrees to pay $4.9bn to US

RBS agrees to pay $4.9bn to US”

Chief Executive Ross McEwan's predecessor, Stephen Hester, who joined the bank following the bailout in 2008, said he had texted McEwan this morning to congratulate him and the team. Many analysts had forecast that the settlement could be larger than $4.9bn.

RBS reached a $500 million settlement with NY state in March to resolve charges it misled investors who bought the mortgage-backed bonds.

"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 Royal Bank of Scotland has apparently reached a tentative deal of Dollars 4.9 billion to resolve the United States probe into the sale and structuring of its mortgage backed securities.

In March, Barclays agreed a $2bn settlement with USA regulators, and Deutsche Bank paid $7.2bn.

It clears the way for the British Treasury to sell more shares in the lender, which is now 71% owned by the United Kingdom taxpayer.

The prospect of a heavy fine by United States authorities made the government reluctant to sell shares in the bank bailed out by United Kingdom tax payers after the 2008 financial crisis.

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The settlement also means RBS can start to pay back the United Kingdom government, who provided the bank with a £45 billion ($61 billion) bailout in 2008. Last year, the government said it would start reprivatizing RBS by selling £3 billion ($4 billion) of shares before the end of the 2018-2019 financial year.

The widening of the appeal process shows RBS still grappling to deal with past misconduct issues on the same day it reached a $5 billion settlement with US authorities over its sale of mortgage bonds. Last year, Attorney General Jeff Sessions instructed USA attorneys to no longer include third-party consumer relief in corporate penalties, which had been an Obama administration practice that contributed to the headline-grabbing penalty sizes for Bank of America, Credit Suisse, Deutsche Bank and Citigroup.

With (Other OTC: WWTH - news) the penalty paid, RBS can now open talks with United Kingdom regulators about the resumption of dividend payments.

While RBS still has to agree the final terms of the DoJ settlement, McEwan said the size of the penalty will not change.

"This is hardly a Silicon Valley company".

RBS may have benefited from settling under Trump's administration, which has been softer on banks than that of his predecessor Barack Obama.

The Royal Bank of Scotland has already paid out tens of billions of dollars in penalties following the global financial crisis.



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