Royal Bank of Scotland Group will pay $1.1 billion to resolve claims that it sold toxic mortgage-backed securities to credit unions that later failed, according to the U.S. National Credit Union Administration. David Pollard reports.
Royal Bank of Scotland forced to fork out $1.1 billion dollars to settle a misselling claim in the U.S. The U.S. regulator accusing Britain's state-funded lender of selling toxic mortgage-backed securities to credit unions, that later failed. SOUNDBITE (English) REUTERS UK BANKING CORRESPONDENT, LAWRENCE WHITE, SAYING: "This is one of the biggest settlements that RBS has made yet, but they have another 15 outstanding. In terms of impact, this is the tremor in the watercup before the T-Rex arrives." RBS has set aside five billion dollars to settle historic misconduct charges. Tuesday's settlement taking a decent bite out of that pot. And analysts are concerned total claims will be much higher. SOUNDBITE (English) REUTERS UK BANKING CORRESPONDENT, LAWRENCE WHITE, SAYING: "So the Justice Department settlement is the big one that analysts are worried about. Estimates range from 9 billion of upwards to 20. Which with RBS's market cap of around $26 billion dollars would be an existential threat were it to get that far." RBS hasn't made a profit since 2007. It's also struggling to find a buyer for 300 branches it MUST sell before the end of next year, under EU competition rules. Shares in the bank flat on Wednesday... A reflection perhaps that this might be the calm before the storm.