Royal Bank of Scotland has taken a $4 billion provision as it prepares to settle claims in the United States that it mis-sold toxic mortgage-backed securities in the run up to the 2008 financial crisis. Rosanna Philpott reports.
It's been labelled the painful legacy of the financial crash RBS putting aside 4bn dollars to cover the mis-selling of mortgage-backed securities in the US as negotiations continue with the department of Justice SOUNDBITE (English) REUTERS UK BANKING CORRESPONDENT LAWRENCE WHITE, SAYING: "These negotiations have taken a long time. Analysts say there's little correlation between how much banks of these securities banks sold and what their final fine is. So it really depends on the banks' ability to negotiate with the US Justice Department." This provision makes it almost certain that RBS won't turn a profit this year - making it the 9th year in a row. While underlying business is good the bank is struggling with problems dating back to the global financial crisis including US settlements and the forced sale of its William's and Glynn branches in the UK. both need to be completed before they can think about resuming dividends. SOUNDBITE (English) REUTERS UK BANKING CORRESPONDENT LAWRENCE WHITE, SAYING: "RBS have come after Credit Suisse and Deutsche Bank already have made their final settlements known, which puts a little bit of pressure on RBS to get this done. Obviously the timing of the new US administration coming in as well is another thing that may have delayed their settlement." Shares actually rose on Thursday morning by 1% Investors welcoming signs of clarity on what the final fine might be.. Whilst RBS CEO Ross McEwan told Reuters he doesn't know how long negotiations will take Analysts say they think a final settlement will be reached in the first half of 2017