RBS to settle with US Department of Justice

RBS to settle with US Department of Justice

Britain's state-rescued Royal Bank of Scotland said on Thursday (May 10) it had been fined US$4.9 billion by the US Justice Department over its role in the sub-prime crisis.

McEwan had hoped for a settlement before the end of 2017, but changes at the DOJ following the inauguration of U.S. President Donald Trump saw negotiations slip back.

Chief executive Ross McEwan, said: "Today's announcement is a milestone moment for the bank".

The latest settlement follows a £5.5bn (£4.1bn) USA penalty agreed with the Federal Housing Finance Agency last July.

The settlements have weighed heavily on the bank amid fears over the size of the deals, with other banks having forked out mammoth sums.

The bank warned that the agreement was subject to the Department of Justice (DOJ) and RBS entering into a legally binding agreement.

The British government announced in November that it planned to sell off £3 billion ($4.07 billion) worth of RBS shares in the 2018-2019 fiscal year and it looks as if those plans will now go ahead.

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Accern also assigned news stories about the financial services provider an impact score of 44.8826495689191 out of 100, meaning that recent media coverage is somewhat unlikely to have an effect on the stock's share price in the near future.

The settling of the outstanding penalty for RBS' role in the financial crisis was the last obstacle standing in the way of selling the government's enormous 71% stake back to the private sector in what will be the biggest privatisation in United Kingdom history.

He added: "This item hanging over a stock of our nature makes it more hard to sell".

This meant that the United Kingdom government was unable to sell of any of its shares in the company. "At first the dividend is likely to be a fraction of the £770m paid in 2007, but it will be a hugely significant milestone on the road to the bank's eventual return to the private sector". Under the terms of the deal, the bailed-out lender has agreed to pay a civil monetary cash penalty of $4.9 billion (£3.6 billion).

After ten years of restructuring, paying fines and shedding around 1.5 trillion pounds in assets, the DOJ settlement means RBS's last large legacy issue is out of the way.

In a research report shared with investors and clients this morning, Shore Capital reconfirmed their Hold rating on Royal Bank of Scotland Group The PLC (LON:RBS) shares.

"This removes the last great barrier to the Government selling off its stake and we would envisage that the Chancellor will expedite the disposal of its shareholding".

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