Royal Bank of Scotland Group PLC today put aside an extra $3.8 billion to cover future settlements with U.S. authorities over the sale of toxic mortgage-backed securities before the financial crisis, offering investors hope that the British bank is getting closer to resolving one of its last major crisis-era litigation headaches, the Wall Street Journal reported. The provision will likely push the 72 percent U.K. government-owned bank to one of its largest annual losses since its taxpayer bailout in 2008, further denting the bank’s prospects for paying dividends in the medium term. RBS said that the timing of any settlement with U.S. authorities remained “uncertain.” The extra provision, which will be taken as part of the bank’s full-year earnings next month, will take the total the bank has put aside to cover the potential penalties to $8.3 billion and will reduce its Tier 1 capital ratio to 13.6 percent. The Justice Department is probing criminal and civil issues related to RBS’s sale of mortgage bonds at the height of the U.S. housing boom. The additional provision is mostly to cover that investigation, RBS added. The bank had already earmarked $5.6 billion to pay for a settlement with the Federal Housing Finance Agency.
