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Royal Bank of Scotland Group PLC Issues Statement on FSA Announcement on Interest Rate Hedging Products


Thursday, 31 Jan 2013 09:19am EST 

Royal Bank of Scotland Group PLC (RBS) announced that it has noted the announcement by the Financial Services Authority (FSA) on the findings of its industry wide review of the sale of interest rate hedging products (IRHPs) to some small and medium sized businesses (SMEs) that were classified as retail clients under FSA rules. In its Q2 2012 results, RBS provided GBP 50 million for the redress it expects to offer retail clients who were sold structured collar products. As a result of the rulings from the FSA on IRHPs (to be applied to past business) RBS will, in its 2012 Annual Results, meaningfully increase its provision to meet the additional costs of redress across its broader SME IRHP portfolio (attributable primarily to products sold in the period 2001 to 2008 when interest rates were higher). This larger provision will be determined once RBS has further engaged with the FSA on its position. RBS expects that this provision will remain consistent with the achievement of its target capital ratios.