RBS sets aside an extra £780m in legal and conduct costs as banks put away reserves for forex probe
Royal Bank of Scotland set aside a total of £780m to cover legal and conduct costs last quarter, the latest bank to take pre-emptive action over ongoing investigations into market manipulation.
October 31, 2014 at 12:11 PM
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Royal Bank of Scotland set aside a total of £780m to cover legal and conduct costs last quarter, the latest bank to take pre-emptive action over ongoing investigations into foreign exchange market manipulation.
A £400m provision has been made by the bank to cover the legal cost of an inquiry into suspected rigging of the foreign exchange market, with £100m held back to compensate for further payment protection insurance mis-selling claims.
The rest of the bill, according to chief executive Ross McEwan, is in response to small issues such as an investigation into computing issues as the bank.
It also emerged today that Citigroup has upped its legal spend by around $600m (£376m) as it looks at a potential settlement of its involvement in the alleged forex market fixing, while yesterday Barclays announced that it took £500m out of its third quarter profits to cover potential currency market rigging fines.
Both banks follow on the heels of JPMorgan and Deutsche Bank who each put away over $1bn (£630m) in extra legal costs in the third quarter. HSBC is also likely to have set aside a similar amount in the last four months, to be revealed when it releases its latest results on Monday.
Both UK and US regulators have a number of banks in their sights as they investigate suggestions some traders colluded to artificially fix the £3 trillion-a-day foreign exchange market over several years.
The legal bill for the banks involved in the foreign exchange probe is set to be substantial, with elite firms like Sullivan & Cromwell and Skadden Arps Slate Meagher & Flom called in earlier this year.
In a statement, RBS hinted that its costs may rise as the probe continues: "Ongoing conduct and regulatory investigations and litigation continue to present challenges and are expected to be a material drag on both earnings and capital generation over the coming quarters."
"The timing and amounts of any further settlements or redress however remain uncertain and could be significant."
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