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RBS share price outperforms as group reaches final mortgage settlement with US

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Shares in Royal Bank of Scotland Group (LON:RBS) have climbed higher this morning, as the company reached a final settlement with the US Department of Justice (DoJ) over mis-sold mortgage-backed securities in the run-up to the financial crisis. The milestone settlement, first announced in May this year, has allowed the bailed-out lender to restore its payout to shareholders.

As of 08:41 BST, RBS’ share price had added 0.50 percent to 243.40p, outperforming the benchmark FTSE 100 index which currently stands 0.10 percent lower at 7,603.73 points. The group’s shares have lost more than seven percent to their value over the past year, as compared with about a three-percent gain in the Footsie.

Final DoJ settlement

The DoJ announced in a statement yesterday that it had agreed a $4.9-billion settlement with RBS resolving federal civil claims that the UK lender misled investors in the underwriting and issuing of residential mortgage-backed securities between 2005 and 2008.

“This resolution – the largest of its kind – holds RBS accountable for defrauding the people and institutions that form the backbone of our investing community,” Andrew E. Lelling, US Attorney for the District of Massachusetts, said in the statement.

The news comes after RBS reached a preliminary settlement with the DoJ in May this year.

RBS restarts dividend

RBS announced the settlement in a separate statement, noting that it would pay the fine out of existing liquidity resources, and declared an interim ordinary dividend of two pence per share, to be paid on October 12. The company announced its interim payout in its second-quarter results statement earlier this month, noting at the time that it was subject to the timing of finalisation of the DoJ settlement.

“We are pleased to have reached a final settlement with the DoJ and that we can focus our energy on serving our customers better and returning capital to our shareholders,” RBS’ chief executive Ross McEwan noted today, adding that there was “no place for the sort of unacceptable behaviour alleged by the DoJ at the bank we are building today”.

As of 08:57 BST, Wednesday, 15 August, Royal Bank of Scotland Group share price is 242.80p.

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