Shares in Royal Bank of Scotland (LON:RBS) rose on Thursday, as investors welcomed some clarification on the size of the fine it would pay to the Royal Department of Justice.
RBS confirmed a further £3.1 billion had been set aside to cover the costs, relating to its role in causing the 2008 financial crisis. The amount put aside by the bank now totals around £6.7 billion, and will mean that RBS is unlikely to make a profit for the ninth year in a row.
RBS, which is 72 percent state-owned, was one of many banks sued by the US Department of Justice for selling risky mortgages prior to the 2008 financial crash. After nearly a decade of litigation, earlier this month Credit Suisse and Deutsche Bank agreed to pay $5.3 billion and $7.2 billion respectively to settle their cases.
“This bank, and of course the British taxpayers, have paid a very heavy price for the decisions that were made at RBS before the crisis,” RBS Chief Executive Ross McEwan said on a conference call with reporters on Thursday.
“Today’s announcement is yet another painful example of that legacy,” he said.
The agreement of a figure will now mean the government can begin selling its stake in the bank, which was bailed out for around £45 billion during the financial crash. Uncertainty over the size of the fine in the US meant plans to sell further shares were shelved.
Investors reacted positively to the news, sending shares up 4.44 percent by 10am GMT.