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Home / Business / RBS settles DOJ mortgages with a $ 5 billion payment

RBS settles DOJ mortgages with a $ 5 billion payment



  Big banks rake in huge profits

The Royal Bank of Scotland has already paid several billion dollars in fines following the global financial crisis. Now it is paying $ 5 billion more to make a line under the crisis.

The British bank has "in principle" reached an agreement with the US Department of Justice to end the investigation of allegations that it has sold risky loans billions between 2005 and 2007, it said in a statement on Thursday.

Under the proposed settlement, RBS ( RBS ) will pay a $ 4.9 billion fine. The transaction is pending and will depend on the bank and the DOJ entering into a legally binding agreement.

Including the penalty announced on Thursday, RBS has paid approximately £ 21

billion ($ 28.4 billion) in settlements and fines following the 2008 global financial crisis.

Related: RBS achieves a profit for the first time in a decade

The settlement marks a "milestone moment" for the bank, CEO Ross McEwan said in a statement.

"Achieving this fundamental agreement with the US Department of Justice will, once completed, enable us to deal with this significant remaining legacy issue and is the price we pay for the global ambitions of this bank before the crisis have to. "he said.

The amount of compensation – probably the last major penalty for the bank – was lower than feared by analysts. Some predicted RBS would have to pay about $ 10 billion.

The bank's shares in London rose 6.5% after its announcement.

Related: RBS makes a profit for the first time in a decade

The British government owns more than 70% of RBS, a legacy of £ 45 billion ($ 61 billion) taxpayers from the bank in 2008. The DOJ settlement could pave the way for the government to relieve its involvement.

"Our policy remains to return the bank to private hands as soon as we can achieve a fair value for the stock, with the fair value well below what the previous government paid for it," said the British Treasurer Philip Hammond April.

RBS said earlier this year that it earned £ 752 million ($ 1 billion) in 2017, the first profit after nine consecutive years of losses totaling £ 58 billion ($ 79 billion).

RBS agreed last year to pay $ 5.5 billion to fund a separate investigation by the Federal Housing Finance Agency. The bank said that about USD 3.5 billion of the DOJ settlement would be covered by existing provisions, while the remainder in the second quarter of 2018 was explained by an incremental charge.

– Alanna Petroff contributed to the coverage. [19659018] CNNMoney (New Delhi) First published May 10, 2018: 3:25 pm ET


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