Royal Bank of Scotland plc (RBS) - Get Report shares booked solid gains Thursday after the bank said it will book a £3.1 billion ($3.8 billion) provision in advance of a settlement with the U.S. Department of Justice linked to the sale and underwriting of mortgage-backed securities in the run-up to the global financial crisis.
The additional writedown takes the total provisions the state-controlled lender will book in the fourth quarter to £6.7 billion, the bank said, but would "not directly impact the distributable reserves of The Royal Bank of Scotland Group plc.".
However, the bank warned that it continues to cooperate with the DoJ and that duration and outcome of ongoing investigations into the lender's activities during that time remains "uncertain, including whether settlements for all or any of such matters may be reached."
"Putting our legacy litigation issues behind us, including those relating to RMBS, remains a key part of our strategy. It is our priority to seek the best outcome for our shareholders, customers and employees," said RBS CEO Ross McEwan.
RBS will published its full-year earnings on Feb. 24. Shares in the bank rose more than 2% in early London trading to change hands at 231.6 pence each by 08:45 GMT, extending their three-month gain to more than 20%.