Royal Bank of Scotland has agreed a $4.9bn (£3.6bn) penalty with the US Department of Justice to end an investigation into sales of financial products in the run-up to the financial crisis, clearing the way for the UK government to sell its 71% stake in the bank.
The RBS chief executive, Ross McEwan, said the agreement in principle was a “milestone moment for the bank”. The penalty relates to RBS’s sale of financial products linked to risky mortgages between 2005 and 2007.
McEwan said: “Reaching this settlement in principle with the US Department of Justice will, when finalised, allow us to deal with this significant remaining legacy issue and is the price we have to pay for the global ambitions pursued by this bank before the crisis. Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer.”
The prospect of a large penalty had been hanging over the bank for years, making its shares hard to value. The settlement is smaller than expected – two years ago, the body which controls the taxpayer stake warned the bank could face a penalty of more than $12bn.
RBS is also expected to resume dividend payouts to shareholders following the settlement.
Neil Wilson, chief market analyst at trading platform Markets.com, said: “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 71% shareholding.”
For more read the full of article at The Guardian
