The Chairman of the firm responsible for the UK taxpayers' stake in Lloyds and Royal Bank of Scotland says RBS could face further fines from regulators over sales linked to the US sub-prime mortgage crisis
The Daily Telegraph reports that the chairman of UK Financial Investments, the body responsible for the Government's stake in Royal Bank of Scotland and Lloyds Banking Group, has warned that RBS could face further fines from regulators over sales linked to the US sub-prime mortgage crisis.
Robin Budenberg, who joined UKFI in 2010 from UBS, told the Treasury Select Committtee (TSC) on Tuesday that while it was difficult to estimate future liabilities, potential fines had formed a 'fundamental part of discussions' between the RBS board and the Bank of England’s Prudential Regulation Authority. Making reference to JP Morgan, which last month agreed to pay $5bn to settle a string of legal cases relating to sales of mortgage-backed securities, Budenberg said mortgage trading was one of the outstanding issues RBS faced.
'It is clear that the PRA is rightly concerned, as is the board of RBS about these potential liabilities', said Budenberg. James Leigh-Pemberton, the new chief executive of UKFI, added that the matter was 'of great concern'.
Last week, RBS agreed a $150m settlement with US regulators over allegations it 'cut corners' in a 2007 sale of $2.2bn of mortgage-backed bonds.
To access the complete Bloomberg article hit the link below:
image: © Elliot Brown