World Economy

RBS Profits Almost Wiped Out on US Fine

RBS Profits Almost Wiped Out on US FineRBS Profits Almost Wiped Out on US Fine

Profits at Britain’s Royal Bank of Scotland almost evaporated in the second quarter after a vast US fine over its role in the notorious subprime crisis, the lender said Friday.

Earnings after taxation collapsed to just £96 million ($125 million) in the three months to the end of June, RBS said in a results statement, AFP reported.

That compared with £680 million in the same part of the previous year.

Operating profit halved to £613 million over the reporting period.

Edinburgh-based RBS was hit by £782 million in litigation and conduct costs in the second quarter.

That helped to cover part of the vast settlement reached with US regulators earlier this year over claims it missold mortgages in the run-up to the 2008 global financial meltdown and subsequent worldwide recession.

In May, RBS was fined $4.9 billion by the US Justice Department over its role in the subprime housing crisis but much of the cost had already been set aside, while the total was less than expected.

The lender remains majority-owned by the British government after receiving the world’s biggest banking bailout at the height of the financial crisis.

In June, the rightwing Conservative government headed by Prime Minister Theresa May sold a 7.7% stake in RBS, leaving it still with a controlling stake of 62.4%, much of which it plans to offload through to 2023.

Meanwhile, the banking group said: “We intend to declare an interim dividend of 2p per ordinary share. Declaration of the interim dividend is subject to the timing of finalization of the previously announced civil settlement in principle with the US Dept of Justice in relation to the DoJ’s investigation into RBS’s issuance and underwriting of US RMBS (residential mortgage-backed securities).”


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