Home news US mortgage probe fine to cost RBS £3.6bn

US mortgage probe fine to cost RBS £3.6bn

14
0


Royal Bank of Scotland (RBS) has agreed a mis-selling settlement with US regulators that will cost it £3.6bn, as it tries to draw a line under costly legacy mistakes.

The £4.2bn fine agreed with the Federal Housing Finance Agency (FHFA) – which Sky News had reported last week was looming – would cost the bank £3.6bn after a number of reimbursements, RBS said.
It relates to sales to US government-backed loan firms Fannie Mae and Freddie Mac prior to the 2008 financial crisis, when RBS was among the biggest players on Wall Street.
The bank is yet to agree a separate deal with the US Department of Justice, which could be higher.
RBS said that while it had largely made enough provision for the FHFA penalty, it would take an additional charge in its second quarter of £151m to cover the cost.
Its chief executive, Ross McEwan, said: “Today’s announcement is an important step forward in resolving one of the most significant legacy matters facing RBS and is further evidence of the determination of the bank’s leadership to put our remaining issues behind us.
“This settlement is a stark reminder of what happened to this bank before the financial crisis, and the heavy price paid for its pursuit of global ambitions.”

It marked the 17th settlement with a financial institution for the FHFA in the matter.
RBS shares were 2% up on the news as shareholders saw the penalty as another step towards the bank’s recovery.
It remains more than 70% owned by the public purse as rival Lloyds is back in private hands.
The Chancellor, Philip Hammond, has signalled that RBS needs to resolve many of its legacy issues before a share sale can be considered.
Before the general election, Mr Hammond said fair value for the stake could be below the 502p paid by the Labour government in 2008.
They are currently trading below 260p.

Source: SKY News