RBS share sale hindered by US settlement, says UKFI chairman

16th Nov 2016 17:19

(ShareCast News) - Chairman of UK Financial investments (UKFI), the agency that manages Britain's stakes in bailed out banks, James Leigh-Pemberton said that the Royal Bank of Scotland's potential fine from the US Department of Justice is hindering the government's share sale plans, according to a report by Reuters.The bank's fine is for a settlement over its role in selling mortgage-backed securities in the lead up to the 2008 financial crisis."It could be $5bbn, it could be $12bn, and based on what happened to Deutsche Bank it could be more," Leigh-Pemberton told the Treasury Select Committee.The committee was questioning UKFI on its management of the government's sale of its RBS stake.Deutsche Bank was initially fined $14bn from the DoJ and is currently fighting against that.Investors are unlikely to want to buy RBS' shares until the fine has been resolved due to the likely impact on its capital position."The direct impact of the settlement number on the bank's book value and capital is an almost penny-for-penny impact on the share price," Leigh-Pemberton said.He also added that UKFI has raised the settlement with the government and that the Treasury is "acutely conscious of the impact of this litigation" on RBS and its share value.Alongside the US case the bank also has to resolve the disposal of branches under the Williams & Glyn name in order for investors to gain interest in its stock, according to Leigh-pemberton.The bank has said that the delays in the sale of Williams & Glyn are due to the complexities of creating a standalone technology platform.RBS has not made a profit since it was bailed out by the government for £46bn during the financial crisis.The share price fell by 1% to 210.37p at 1717 GMT on Wednesday.