The U.K. government is likely to wait for Royal Bank of Scotland Group Plc to reach a settlement with the U.S. Department of Justice over claims of mis-selling mortgage-backed securities during the 2008 financial crisis before selling its 71% stake in the lender, "two bankers involved in the process" told the Financial Times.
CFO Ewen Stevenson told the FT's banking weekly podcast that the looming settlement, which will include a potentially hefty fine, was a "significant overhang" on RBS, while also impeding the government's ability to privatize the bank.
The government is aiming to quickly restart the sell-off of its stake — reported to be worth about £3 billion — to institutions, using an overnight accelerated book building process, once RBS settles with the U.S. regulator, according to another person close to the process.
Meanwhile, the government was also reportedly looking to relaunch its sale attempts during the summer, despite the impending fine, to increase liquidity in RBS' shares. However, one banker told the FT that following the outcome of Prime Minister Theresa May's snap elections in June, that window of opportunity closed.
RBS, which has reportedly said it may need further provisions to meet the DOJ fine, has already agreed to pay a $5.5 billion penalty to U.S. regulators in a separate MBS settlement, while the European Commission signed off a roughly £835 million package of measures to ameliorate the bank's failure to sell a network of branches that was to be called Williams & Glyn.