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RBS confirms dividend after final agreement on DoJ penalty

By Oliver Haill

Date: Wednesday 15 Aug 2018

RBS confirms dividend after final agreement on DoJ penalty

(Sharecast News) - Royal Bank of Scotland overnight confirmed the final cash settlement of $4.9bn (£3.7bn) had been agreed with the US Department of Justice a penalty for the bank's misselling of residential mortgage-backed securities in the run-up to the financial crisis.
This settlement means the FTSE 100 bank will be able to pay the 2p-per-share interim dividend it indicated at its recent half-year results.

The DoJ penalty will be paid out of existing liquidity resources, as RBS indicated on 10 May when it announced that it had reached the settlement in principle, with the cash accounted for in the interim results earlier this month.

The Justice Department said in a statement overnight that the penalty is the largest ever imposed on a bank for misconduct leading up to the financial crisis.


Transcripts of internal conversations at the bank during 2007 and 2008 were released by the DoJ alongside details of the settlement.

"Despite assurances by RBS to its investors, RBS's deals were backed by mortgage loans with a high risk of default," said Andrew Lelling, district attorney for Massachusetts.

While RBS disputes the allegations and does not admit wrongdoing, chief executive Ross McEwan said, "There is no place for the sort of unacceptable behaviour alleged by the DoJ at the bank we are building today."

But the DoJ said senior RBS executives "showed little regard for their misconduct and, internally, made light of it".

Details of one pre-crisis conversation showed RBS's chief credit officer in the US referred to selling investors products backed by "total fucking garbage" loans that were "disguised to, you know, look okay".

In a later exchange, the bank's head trader received a call from a friend who said: "[I'm] sure your parents never imagine[d] they'd raise a son who [would] destroy the housing market in the richest nation on the planet."

He responded: "I take exception to the word 'destroy.' I am more comfortable with 'severely damage'."


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