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US$12bn fine warning puts RBS share sale on hold

Thursday, November 17, 2016 1:39
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(Before It's News)

Royal Bank of Scotland PLC (LON:RBS) is set for a bumpy ride today after a warning yesterday it may face fines of up to US$12bn for US mortgage mis-selling.

The warning came from UKFI, the organisation that oversees the taxpayers’ 73% stake in the bank, in an appearance before MPs.

RBS is under investigation by the US Department of Justice over the way it sold mortgage-backed securities in the run-up to the 2008 financial crisis.

Deutsche Bank, another European bank under investigation, has already been warned by the DoJ that it faces a fine of up to US$14bn and James Leigh-Pemberton, UKFI’s chairman,  said RBS may face something similar.

It could be ‘US$5bn or US$12bn or more’ he said, adding that because of the uncertainty the sale of more of the government’s stake was on hold.

Another sticking point was the failure to sell RBS’s Williams & Glyn’s arm, said Leigh-Pemberton.

Until these two issues are resolved, it was back to ‘wait-and-see’ mode for the government.

The UK government effectively took over RBS for a price of around 500p when it was rescued at the height of the financial crisis. 

Story by ProactiveInvestors

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