Royal Bank of Scotland

RBS will pay its first dividend in 10 years, the bank confirmed today, after reaching a $4.9bn settlement with the US Department of Justice (DoJ) over the sale of residential mortgage-backed securities between 2005 and 2007.

The DoJ said it was the largest it had imposed for “financial crisis-era misconduct” on a single entity.

RBS will pay an interim dividend of 2p.

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RBS will pay $4.9bn to settle US claims that it misled investors about residential mortgage-backed securities between 2005 and 2007.

Stephanie Butcher, fund manager at Invesco Perpetual, says the fine is in line with what was expected and "this will be regarded as drawing a line under a pretty unpleasant period" for everyone at RBS and its investors.

The bank will resume paying a dividend to its shareholders and Ms Butcher says: "When you look at the capital at RBS, it actually looks really quite healthy and the earnings results recently underlined that."

Reuters

The US Justice Department has announced that Royal Bank of Scotland has agreed to pay $4.9bn to settle claims that the bank misled investors on residential mortgage-backed securities between 2005 and 2008 during the financial crisis.

The department said that RBS disputes the allegations and does not admit wrongdoing.

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Hargreaves Lansdown, the investment firm, is reporting its full-year results on Tuesday but its shares are leading the FTSE 100 risers today - up 1.73% at £21.13.

Meanwhile, Royal Bank of Scotland, which published its latest financials on Friday is the biggest faller, with its shares down 2.5% at 251.25p.

The wider FTSE 100 is up 9.28 points at 7,668.38.

On the FTSE 250, Regus-parent company IWG dominates the fallers, down 23.1% at 230.65p after it called off talks with potential buyers.

It is closely followed by Spire Healthcare, down 21.9% at 192.85p, which issued a profit warning on lower spending by the NHS.

The FTSE 250 is up 35.28 points at 20,670.61.

Reuters

The script was supposed to go like this - RBS settles with the Department of Justice removing massive cloud of uncertainty, bank resumes paying dividends, government starts selling off its stake - and hey presto, profitable + income generating bank + dwindling government involvement = share price goes up.

In fact, shares have come down quite significantly. How come?

According to RBS chief executive Ross McEwan, it is because of Brexit.

"There definitely is a Brexit discount on companies that have a strong UK focus like ourselves - you've also got to remember that we are seeing some of the weakest economic growth in recent years so we are preparing ourselves for a no deal scenario and a very slow time in 2019 - which we obviously hope doesn't happen," said Mr McEwan.

RBS is not the only bank whose shares are suffering a Brexit discount.

Lloyds has paid off the government in full, is generating very solid profits and is paying very handsome dividends, and yet its share price is down over 10% since the start of the year.

RBS' share price is currently up 8 points or 3.2% to 258p.

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Bank of England Governor Mark Carney also told the Today programme that RBS's results were another sign the country was moving beyond the financial crisis.

The bank said it was on course to pay its first dividend in 10 years.

It said it would be paying 2p a share as an interim dividend as soon as its $4.9bn (£3.8bn) settlement with the US Department of Justice over mortgage-backed securities was completed.

The cost of the settlement meant that RBS banked lower profits for the January-to-June period than in 2017.

Attributable profit was £888m, compared with £939m in 2017.