Royal Bank of Scotland has set aside an additional £3bn for litigation and claims, including payment protection insurance and mortgage-backed securities claims.
In a trading update published today, RBS says it has made provisions of £1.9bn to cover claims and conduct matters, primarily relating to mortgage-backed securities and securities litigation, following recent third party settlements and regulatory decisions.
In addition, the bank has set aside an extra £465m for PPI redress, taking its total provision for PPI so far to £3.1bn.
RBS says PPI claims in the final quarter of 2013 continued at previous rates, rather than declining as anticipated, and claims are now expected to continue for a longer period.
The bank has also made a further £500m provision for interest rate swaps redress. It says this reflects higher than expected claims volumes and redress payments.
The bank’s total provision for interest rate swaps, including expenses, was £1.25 billion as of 31 December 2013.
RBS chief executive Ross McEwan says: “Billions of pounds have been spent to resolve conduct and litigation issues in recent years. Costs on this scale were not predicted by anyone when RBS was rescued in 2008.
“They come in addition to the costs of restructuring the bank’s bad assets and restoring its funding to prudent levels after the financial crisis.
“After five years of hard work and tough choices, the path ahead for RBS is much clearer. We have restored our fundamental soundness and have the financial strength to deal with issues like this.”
RBS also announced that its executive committee will not receive bonuses this year. McEwan has already said he will not take a bonus for the bank’s 2013 or 2014 performance.