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.

We at the Fool discuss whether you should buy into the banks, or steer clear of them, in our BRAND-NEW report. “The Motley Fool’s Guide To Investing In Banks” is available without obligation and completely free — simply click here now.

> Sam does not own shares in RBS.