Arab Today, arab today rbs sets aside another £20bn for scandals
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RBS sets aside another £2.0bn for scandals

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Arab Today, arab today RBS sets aside another £2.0bn for scandals

Royal Bank of Scotland
London - AFP

Britain's Royal Bank of Scotland has set aside another £2.0 billion to cover mortgage-backed securities litigation in the United States and compensation for credit insurance mis-selling in Britain, it said Wednesday.

Fourth-quarter earnings will be reduced by the equivalent of $2.8 billion or 2.6 billion euros, the state-rescued lender warned in a statement detailing a raft of vast financial provisions.

RBS is putting aside £1.5 billion to cover expected legal action on US residential mortgage-backed securities, and an extra £500 million to cover possible compensation for mis-selling payment protection insurance (PPI).

The Edinburgh-based company also took an impairment charge of nearly £500 million on the value of its troubled private banking business.

The group is meanwhile pumping another £4.2 billion into its pension scheme.

In reaction to the news, RBS shares slid 0.96 percent to 258.40 pence in early morning London deals.

"I am determined to put the issues of the past behind us and make sure RBS is a stronger, safer bank," said RBS chief executive Ross McEwan in the statement.

"We will now continue to move further and faster in 2016 to clean-up the bank and improve our core businesses.

"We've always been open about the scale of past issues facing RBS and although there is clearly much more to do, this announcement is a further step towards addressing legacy issues and building a great bank for our customers and delivering long term value for our shareholders."

The additional hit for US mortgage legal action -- which is expected to be settled soon -- takes the total charge to £3.8 billion.

However, RBS stressed this total only related to civil claims, adding that it had not made any provisions linked to the ongoing US Department of Justice and various US Attorneys General investigations into the matter.

"The costs of resolving these investigations could individually or in aggregate prove to be substantial," it warned.

The bank added that its total bill for payment protection insurance (PPI) mis-selling compensation in Britain now stands at £4.3 billion.

RBS, which is almost 73-percent owned by the British government after a vast bailout during the global financial crisis, publishes annual results on February 26.

 

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