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Report: RBS might book multibillion-dollar US mortgage bond charge in Q4

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Report: RBS might book multibillion-dollar US mortgage bond charge in Q4

Royal Bank of Scotland Group Plc might book a multibillion-dollar charge in the fourth quarter related to U.S. mortgage bond litigation, Bloomberg News reported Jan. 19, citing "people with knowledge of the matter."

The bank has not yet settled a case brought by the U.S. Department of Justice related to the misselling of mortgage-backed securities in the run-up to the financial crisis. It could use as basis for the provision recent settlements reached by European peers Deutsche Bank AG and Credit Suisse Group AG. These banks agreed to pay $7.2 billion and $5.28 billion, respectively.

Senior executives at RBS are reportedly in favor of making a provision prior to settlement to limit the impact on the bank's 2017 financial accounts. For 2016, the bank is expected to post a net loss.

The U.K. lender would have to seek approval from its nonexecutive board and external auditors before taking a provision, a "person with knowledge of the matter" told Bloomberg.

Meanwhile, a U.S. appeals court on Jan. 18 reinstated an MBS lawsuit brought by the Federal Deposit Insurance Corp. against five European banks, including RBS, Deutsche Bank and Credit Suisse.