Business

Britain’s Royal Bank to pay $4.9 billion to settle US probe

Royal Bank of Scotland Group Plc has reached a tentative deal to pay $4.9 billion to resolve a U.S. mortgage probe, Bloomberg reports.

Top executives of the Britain-owned bank said it will commence discussions with British regulators about restarting dividends after a decade. The Edinburgh-based lender expects to reach a final agreement with the U.S. over an investigation into the packaging and sale of mortgage-backed securities in coming weeks.

“Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer,” RBS Chief Executive Officer Ross McEwan said in a statement early Thursday. It’s “a milestone moment” and “the price we have to pay for the global ambitions pursued by this bank before the crisis.”

A preliminary settlement with the Department of Justice also makes it easier for the U.K. government to attract buyers for its approximate 70 percent stake after bailing out RBS during the financial crisis.

The U.K. government spent 45.5 billion pounds ($61.6 billion) rescuing the Edinburgh-based firm, then the biggest bank bailout in the world. RBS closed its U.S. mortgage-bond trading and origination business in 2015 as it cut investment-banking operations around the world to focus on consumer and commercial lending in the U.K. and Ireland.

 

In March, Barclays Plc agreed to pay $2 billion to settle its U.S. probe, securing a penalty less than half of what U.S. authorities originally demanded. The Justice Department originally wanted a fine of about $5 billion, but the British lender refused to pay any more than $2 billion, Bloomberg had reported in 2016.

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