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| RBS bank agrees $4.9bn civil penalty to end US probe | RBS bank agrees $4.9bn civil penalty to end US probe |
| (35 minutes later) | |
| Royal Bank of Scotland has agreed a $4.9bn (£3.6bn) penalty with US regulators to end a long-running probe into its actions in the lead-up to the financial crisis. | Royal Bank of Scotland has agreed a $4.9bn (£3.6bn) penalty with US regulators to end a long-running probe into its actions in the lead-up to the financial crisis. |
| RBS boss Ross McEwan said the agreement in principle with the US Justice Department (DoJ) was "a milestone". | RBS boss Ross McEwan said the agreement in principle with the US Justice Department (DoJ) was "a milestone". |
| The probe focused on the sale of financial products including toxic mortgage bonds from 2005 to 2007. | The probe focused on the sale of financial products including toxic mortgage bonds from 2005 to 2007. |
| The government is now expected to start selling its 71% stake in the bank. | The government is now expected to start selling its 71% stake in the bank. |
| In November last year, the government said it would start reprivatising RBS by selling £3bn of shares before the end of the 2018-2019 financial year, but Chancellor Philip Hammond said he was reluctant to sell shares while the DoJ probe was still to be resolved. | |
| Shares in RBS were up by nearly 5% in early trade. | |
| Analysis: Simon Jack, BBC business editor | Analysis: Simon Jack, BBC business editor |
| The settling of the outstanding penalty for RBS' role in the financial crisis was the last obstacle standing in the way of selling the government's enormous 71% stake back to the private sector in what will be the biggest privatisation in UK history. | The settling of the outstanding penalty for RBS' role in the financial crisis was the last obstacle standing in the way of selling the government's enormous 71% stake back to the private sector in what will be the biggest privatisation in UK history. |
| The government owns over £20bn worth of shares. That is a colossal amount to sell and will take several years. | The government owns over £20bn worth of shares. That is a colossal amount to sell and will take several years. |
| The first sales will be at a loss, but the government will hope that over time, as the huge overhang of shares to sell dwindles and profits continue to rise, the public may get more money back. | The first sales will be at a loss, but the government will hope that over time, as the huge overhang of shares to sell dwindles and profits continue to rise, the public may get more money back. |
| The public though are unlikely to ever recoup the £45bn poured into the biggest banking debacle in UK corporate history. | The public though are unlikely to ever recoup the £45bn poured into the biggest banking debacle in UK corporate history. |
| Read more from Simon | Read more from Simon |
| Clearer outlook | |
| RBS said about $3.6bn of the penalty would be covered by money already set aside. Many analysts had forecast that the settlement could be larger than $4.9bn. | RBS said about $3.6bn of the penalty would be covered by money already set aside. Many analysts had forecast that the settlement could be larger than $4.9bn. |
| Last July, RBS paid another hefty penalty of $5.5bn to the US Federal Housing Finance Agency. | |
| The DoJ said further details must be negotiated with RBS before a final deal is done. But Mr McEwan called the settlement a "milestone moment" for the bank. | |
| "Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer," he said. | "Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer," he said. |
| Jane Sydenham, from Rathbone Investment Management, told the BBC: "Removing this final cloud will make a difference, it will mean the government can press ahead with a sale and it can start to look forward, rather than spending all their time worrying about what happened in the past." | Jane Sydenham, from Rathbone Investment Management, told the BBC: "Removing this final cloud will make a difference, it will mean the government can press ahead with a sale and it can start to look forward, rather than spending all their time worrying about what happened in the past." |
| RBS is the last in a line of major banks to pay penalties to the DoJ for their activities in the run-up to the financial crisis. | |
| In March, Barclays agreed a $2bn settlement with the DoJ, and Deutsche Bank paid $7.2bn. | |
| Rivals also charged by the DoJ include Citigroup, JPMorgan Chase, Credit Suisse, Morgan Stanley, Goldman Sachs and Bank of America. |