RBS to pay USD 4.9 billion penalty in settlement with US Department of Justice

The Royal Bank of Scotland has agreed to pay a fine of USD 4.9 billion as part of a settlement with the US Department of Justice.

This move will end an investigation into sales of financial products in the run-up to the financial crisis, clearing the way for the UK government to sell its 71 percent stake in the bank, according to The Guardian.

RBS chief executive, Ross McEwan, said the agreement in principle was a “milestone moment for the bank”. The penalty relates to its sale of financial products linked to risky mortgages between 2005 and 2007 in the US.

RBS reported its first annual profit in a decade in February, making a profit of GBP 752 million in 2017, following a GBP 7 billion loss in 2016. The penalty will take a slice out of the firm’s 2018 profits, but it has already set aside USD 3.46 billion to cover it and will only take a USD 1.44 billion charge in the second quarter.