Treasury held secret meetings with US department to speed up hefty RBS fine
The UK Treasury has held a secret meeting with US officials to chivvy along a several-billion pound fine for Royal Bank of Scotland (RBS), Sky News has reported.
The fine, which has been estimated by some analysts to be worth more than £5m, would draw a line under the bank's pre-bailout misconduct relating to the mis-selling of residential mortgage-backed securities.
According to Sky News, officials from the Treasury were due to speak to the US Department of Justice earlier this week, aiming to speed up negotiations between RBS and the US body.
Read more: Global bank fines from financial crisis aftermath could top $400bn by 2020 says report
The news comes less than two weeks before RBS is due to report its annual results for 2017, in which it is expected to report its tenth consecutive annual loss.
The fine hanging over RBS is one of the major obstacles to it paying a dividend to shareholders – the largest of which, owning around 70 per cent of the bank, is the UK government, which bailed RBS out at the height of the financial crisis.
In last year's Autumn Budget, chancellor Philip Hammond announced the government was planning to sell £3bn worth of shares annually for the following five years, to generate money for the taxpayer.
The bank could manage to squeeze the charge into its 2017 results, due to be reported on 23 February. However it is more likely it will end up in the next year's accounts, meaning 2018 could be yet another loss-making year.
RBS did not immediately respond to City A.M.'s request for comment, while the Treasury declined to comment.
Read more: Nicky Morgan demands FCA publish RBS-GRG report by next week
A long delay
When Donald Trump came to power, talks between the Department of Justice and major international banks – including RBS and Barclays – stalled, according to Sky News. This was due to a staff shortage within the department, which has since been corrected.
Both RBS and the UK government want an agreement to be reached as soon as possible, to get the fine off their backs.
The bank has set aside $3.3bn (£2.4bn) to cover the penalty, and has already paid $5.5bn to the US Federal Housing Finance Agency in relation to its issuance and underwriting of $32bn of residential mortgage-backed securities during the reign of former boss Fred Goodwin.
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