RBS agrees 'milestone' £3.6bn USA fine over subprime lending

Royal Bank of Scotland called it a

Additionally, USD 1.44 billion would be taken as an incremental charge in the second quarter of the year to settle the rest. Under the terms of the deal, the bailed-out lender has agreed to pay a civil monetary cash penalty of $4.9 billion (£3.6 billion). The Justice Department originally wanted a fine of about US$5 billion, but the British lender refused to pay any more than US$2 billion, Bloomberg had reported in 2016.

"Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer", he said in a statement.

The accord is also expected to mitigate a major litigation issue of RBS that has reportedly complicated the United Kingdom government's long-term plan to sell down its over 70 percent share in the bank.

RBS's proposed deal looks to be welcome news for HSBC, UBS and Wells Fargo, among the last remaining big banks with unresolved US investigations over mortgage-backed securities.

The widening of the appeal process shows RBS still grappling to deal with past misconduct issues on the same day it reached a $5 billion settlement with USA authorities over its sale of mortgage bonds.

Once the world's largest bank by assets, RBS was one of the biggest casualties of the financial crisis which crippled credit, stock and housing markets and upended the global economy.




RBS chief executive Ross McEwan called the deal a "milestone".

It narrowly avoided insolvency in 2008 after the government agreed a 45 billion pound (US$61 billion) bailout, just six months after the bank raised 12 billion pounds of emergency cash from shareholders. 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.

With (Other OTC: WWTH - news) the penalty paid, RBS can now open talks with United Kingdom regulators about the resumption of dividend payments.

Neil Wilson, chief market analyst at Markets.com commented: "It's a happy day for RBS, with the DoJ settlement coming in well below what we had feared".

RBS however appears to have benefited from settling under the Trump administration, which has been less hostile towards the banking sector than that of his predecessor Barack Obama.

RBS has already accepted some wrongdoing and set aside 400 million pounds to compensate firms in its GRG unit, and appointed a former high court judge Sir William Blackburne to oversee appeals by customers not happy with their payouts.

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