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RBS bank to set aside another £3bn for fines www.bbc.com
Royal Bank of Scotland will take another financial hit when it sets aside a further $4bn (£3bn) for fines.
As early as Thursday morning it will announce it has now put nearly $10bn in the kitty to pay a monster fine from the US Department of Justice.
It relates to the bank's role in the selling of risky mortgages - the so called subprime crisis - which was at the epicentre of the financial crisis.
This will plunge RBS, 72% owned by the taxpayer, further into the red.
It will make 2016 the ninth year in a row that RBS has lost money.
To be clear, this is not unexpected, nor is it a final settlement. The urgency to settle once and for all which existed around the beginning of this month (before the change of the guard in the US administration with a Trump presidency) has eased as a new administration and a new attorney general are now in place.
Guesses on the final bill from the US vary widely from $12bn-$20bn. If this $10bn did prove to be enough for the final bill, that would be considered a good result.
It remains to be seen whether the new US administration takes a tougher or more lenient approach to misconduct by European banks.
'Big bumps'
Barclays recently walked away from negotiations, preferring to fight the top US lawman in court, rather than pay what the bank considered a fine that was disproportionate to its involvement in the subprime market.
For RBS it is yet another of the "big bumps in the road" that chief executive Ross McEwan has previously warned lie between the RBS of the last nine years and the RBS he hopes it will one day be. Exclude the fines, and RBS is churning out a £1bn profit every three months.
But the sins of the past are grave, as are the penalties. The bank has paid well over £50bn worth since the financial crisis - more than the £45bn the UK taxpayer put in way back when.
RBS and the taxpayer will hope that as painful as this is, it is one step closer to the light at the end of the tunnel.
Published Date:2017-01-26
