RBS sets aside another £2.0 bn for scandals

27th January 2016, Comments 0 comments

Britain's Royal Bank of Scotland has set aside another £2.0 billion to cover mortgage-backed securities litigation in the United States and compensation for insurance mis-selling in Britain, it said Wednesday.

Fourth-quarter earnings will be reduced by the equivalent of $2.8 billion or 2.6 billion euros, the state-rescued lender warned in a statement detailing a raft of vast financial provisions.

RBS is putting aside £1.5 billion to cover expected legal action on US residential mortgage-backed securities, and an extra £500 million for payment protection insurance (PPI) mis-selling compensation.

The group is meanwhile pumping another £4.2 billion into its pension scheme.

And the Edinburgh-based company also took an impairment charge of almost £500 million on its private banking business.

"I am determined to put the issues of the past behind us and make sure RBS is a stronger, safer bank," said RBS chief executive Ross McEwan in the statement.

"We will now continue to move further and faster in 2016 to clean-up the bank and improve our core businesses.

"We've always been open about the scale of past issues facing RBS and although there is clearly much more to do, this announcement is a further step towards addressing legacy issues and building a great bank for our customers and delivering long term value for our shareholders."

RBS, which is 72.9-percent owned by the British government after a vast bailout during the global financial crisis, will publish its annual results on February 26.

© 2016 AFP

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