Royal Bank of Scotland has to shell out $1.1 billion (£846 million) to one US authority as the first of three penalties expected to be demanded for the bank’s role in the 2008 banking meltdown.
The settlement resolves two civil lawsuits over the way the bailed-out bank sold “residential-mortgage-backed securities”. Its mortgage bonds were alleged to have been missold to credit unions before the crash.
RBS boss Ross McEwan has been told that the bank faces more fines from the US. It had put aside £3.8 billion to deal with forthcoming litigation, but it is likely this will have to be increased substantially.
The £846 million is a settlement with the US regulator, the National Credit Union Administration. McEwan said on Tuesday that settlement talks are underway with the Federal Housing Finance Agency, but not yet with the US Department of Justice.
That settlement could amount to £9 billion, according to some analysts.
RBS had to be bailed out by taxpayers to the tune of £45 billion, one of Europe’s largest bank bailouts, giving the taxpayers a 73% stake in the bank. But the stake’s value has slimmed down considerably since 2008 to about £15 billion today, reports the Wall Street Journal.
The Treasury bought RBS shares at an average price of £5—they now trade at £1.77.
Since Brexit, nearly a third of RBS’s market value has disappeared, more than any other major UK bank, the newspaper said.
A year ago, the Guardian newspaper reported that the bank has lost money every year since 2008. The total loss is greater than the £45 billion pumped in, including billions on fines and compensation levied for RBS wrongdoing.
On Tuesday, before this settlement was agreed, McEwan warned that RBS would have to put aside substantial additional money, but noted “we remain focused on the task at hand of continuing to build a really good bank for customers and investors”.
Ah, how things might have been different had that been the sentiment before 2008.
