RBS to reveal funds to settle forex probes

RBS to reveal funds to settle forex probes

2014-10-30 16:50

London - Royal Bank of Scotland will announce how much it has set aside to cover potential fines for manipulating currency markets when it reports third-quarter results on Friday, several banking sources said.

RBS, which is 80%-owned by the British government, is one of six banks in talks with Britain's financial regulator to settle allegations that its staff were involved in the rigging of the $5 trillion-a-day global currency market.

Rival Barclays said on Thursday that it had set aside £500m ($800m) to cover potential FX fines. JP Morgan, UBS and Deutsche Bank have also set aside large sums.

Chief executive Ross McEwan has previously said that the FX investigation could pose a bigger problem for banks than the Libor rate-rigging scandal. RBS paid $612m last year to settle allegations that it manipulated Libor - one of several banks hit with big fines for rigging interest rate benchmarks.

Analyst estimates provided by RBS forecast a pretax profit of £1.1bn in the third quarter, against a £634m loss in the same period last year.

The economic revival in Britain and Ireland has enabled RBS to recover debts that it had previously written off. The amount recovered is expected to be £590m in the third quarter, according to the average forecast of five analysts polled by Reuters. In the same period last year the bank booked impairments of £1.2bn.

The improvement in the bank's performance has sparked hopes that the government could soon start selling the RBS shares Britain acquired through its £45bn rescue of the bank during the 2007-09 financial crisis.

Oliver Holborn, head of capital markets at UK Financial Investments (UKFI), the government agency that manages the state's RBS stake, told lawmakers this month that Britain is closer to selling part of its stake than previously envisaged.

Bankers and political sources told Reuters this month that a first sale of RBS shares could be possible in the next two years.