RBS Royal Bank of Scotland Group PLC

By Max Colchester 

Royal Bank of Scotland Group PLC on Thursday put aside an extra GBP3.1 billion ($3.9 billion) to cover future settlements with U.S. authorities over the sale of toxic mortgage-backed securities before the financial crisis.

The provision will likely push the 72% U.K. government-owned bank to one of its largest losses since its taxpayer bailout in 2008, further denting the bank's prospects for paying dividends in the medium term.

RBS said the timing of any settlement with U.S. authorities remained "uncertain." The extra provision will take the total the bank has put aside to cover the potential penalties to GBP6.7 billion and would reduce its capital ratio to 13.6%.

The Justice Department is probing criminal and civil issues related to RBS's sale of mortgage bonds at the height of the U.S. housing boom. The additional provision is to cover that investigation, RBS added.

RBS is due to present its annual results on Feb. 24. The bank will also outline further cost-cutting measures as its executive team continue to battle to reshape RBS amid low interest rates and a laundry list of litigation issues.

Late last year Deutsche Bank AG and Credit Suisse Group AG settled with the Justice Department. Barclays refused to do so and was sued by the DOJ.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

January 26, 2017 02:31 ET (07:31 GMT)

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