Royal Bank of Scotland has set aside £1.9bn to cover the cost of litigation, the bank has revealed in an unscheduled statement to the London Stock Exchange.
RBS said the funds would cover various claims and conduct-related matters, ‘primarily those related to mortgage-backed securities and securities-related litigation, following recent third-party litigation settlements and regulatory decisions’.
Ross McEwan, chief executive of RBS, said problems are still emerging from ‘the scale of the bad decisions’ made during the financial crisis.
‘Billions of pounds have been spent to resolve conduct and litigation issues in recent years,’ he said.
‘Costs on this scale were not predicted by anyone when RBS was rescued in 2008. They come in addition to the costs of restructuring the bank’s bad assets and restoring its funding to prudent levels after the financial crisis,’ he said.
McEwan said the organisation was strong enough to take the ‘very large provisions’ it announced.
Chairman of the bank Sir Philip Hampton (pictured) said RBS ‘did suffer more than most banks during the crisis’ but the charges ‘represent an extra clearing up of the mess that was created in the bank in the run-up to the 2008 financial crisis.’
The bank said it has set aside a total extra £3.1bn to cover litigation and compensation costs.
Analysts have said the move is expected to be a factor in creating pre-tax losses of £7bn-£8bn for the full year.