After its role in mis-selling toxic residential mortgage-backed securities (RMBS), Royal Bank of Scotland (RBS) CEO Ross McEwan stated that the bank’s chances of reaching a settlement with the U.S. Department of Justice (DOJ) are diminishing. McEwan said on Bloomberg TV that RBS had previously expected to reach an agreement with the DOJ by the end of 2017, but “there are diminishing chances we settle in the year.”
In order to cover potential penalties from U.S. authorities—including the DOJ—for its role in the RMBS scandal, RBS had set aside £3.1 billion ($4.2 billion) back in January 2017. RBS has already agreed to pay a $5.5 billion settlement with the U.S. Federal Housing Finance Agency for its role in underwriting around $32 billion in toxic residential mortgage-backed securities. Last month, the U.K. government announced its plans to begin selling off two thirds of its 71 percent stake in RBS in March 2019.
Due to RBS’s large role in the RMBS scandal, the U.S. DOJ’s fine of RBS could be around $12 billion, according to U.K. Financial Investments. The U.K.’s share sale will not pass until the settlement is reached.
RBS recently announced plans to close 62 additional branches in their home country of Scotland as the litigation against it continues. This means a loss of 158 jobs, with further cuts on the way according to RBS Head of Personal and Business Banking Les Matheson.
“It is final. Any decision like this isn’t a simple and easy one,” said Matheson. “We genuinely have thought long and hard about it.”
Read more about the scandal here.