RBS in talks over US probe settlements

Royal Bank of Scotland (RBS) is in talks to settle one of the two major US investigations into allegations it mis-sold mortgage-backed securities it needs to overcome before the British government can sell its shares in the bailed-out bank.

Chief executive Ross McEwan has been trying to clean up RBS’s balance sheet and end a string of legal cases against the bank. This would open the way for the British government to sell its more than 70% stake in RBS held since it had to step in with a more than £45bn bailout during the financial crisis.

Mr McEwan said the bank could settle a multibillion-dollar lawsuit by the US Federal Housing Finance Agency separately from an investigation by the Department of Justice, which has stalled because of changes in the US government since the election of Donald Trump.

“They are quite separate ... and we are in discussions with them and we are not in discussions with the DOJ other than them still seeking information,” Mr McEwan said at the bank’s annual shareholder meeting in Edinburgh. RBS was one of the world’s leading sellers of mortgage-backed securities in the mid-2000s that plunged in value when the global financial crisis hit in 2008.

The British government, which has sold off some RBS shares, has said the uncertainty about the scale of the penalties from the US investigations is one of the reasons why it halted plans to sell more. British taxpayers face a £29.2bn loss on the value of the UK government’s shares in RBS.

Analysts estimate RBS will have to pay between $3.5bn and $5bn to settle the case with the US Federal Housing Finance Agency. They estimate the bank could have to pay between £2bn and £9bn to settle the case with the US Department of Justice.

- Reuters


More in this Section

Is this the end for zero-hour contracts?

The European Union seeks tax rule action

Despite the ticking clock, some optimism over sterling

Tesco shares climb on green light for Booker deal


Breaking Stories

Index shows slower growth for Irish businesses

Aerospace giants demand Theresa May and EU agree urgent Brexit deal

Solving housing will be time consuming

Diving into opportunies of the sea

Lifestyle

A towering achievement: Exploring Irish castles and beautiful buildings

Books that belong on the gardener's bookshelf

The domestic flash of Francis Brennan

John Wilson touring with music made with Rory Gallagher in Taste

More From The Irish Examiner