Royal Bank of Scotland Group plc Sets Aside £3.1bn For Past Misconduct Issues


In an announcement released just before the market was set to close on Monday afternoon, Royal Bank of Scotland Group (LSE: RBS) (NYSE: RBS.US) revealed that it has decided to make further provisions that now total up to £3.1bn — up from £1.25 billion at 31 December 2013 — for “Payment Protection Insurance redress and related costs” and “various claims and conduct related matters affecting Group companies”.

£1.9bn of the cumulative provision has been primarily set aside for mortagage-backed securities and securities-related litigation, “following recent third party litigation settlements and regulatory decisions”.

A further £465m relates to past misconduct issues relating to PPI redress, after Q4 2013 saw claims continue at previous rates instead of the expected decline. Elsewhere, £500m has been set aside for Interest Rate Hedging Products redress and administration costs.

The shares fell steadily from around 2pm, closing 2.2% below their daily opening price. Further falls may have been avoided by RBS confirming that, along with CEO Ross McEwan, the group’s executive committee would not take a bonus for 2013, though with the news being officially announced so close to the end of trading, we’ll see how the market reacts tomorrow morning.

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> Sam does not own shares in RBS.