But the hapless British bank still has the US Department of Justice to confront, also likely be a multi-billion bill.
RBS illustrates the basic dilemma of bank fines — they are incurred by employees through the damage done to investors, but paid by shareholders (UK taxpayers, in this case) to US taxpayers. The state of New York used funds from the last round of fines to build stables for its annual horse fair.
The management of the bank also has a particularly acute dilemma. Running the bank with high capital levels offers a hugely tempting target for prosecutors eager to extract the biggest figure possible.
BNP Paribas’s $8.9bn sanctions-busting fine in 2014 was a reflection in part of the bank’s financial strength; Deutsche’s $3.1bn cash settlement in December 2016 was a reflection of the solvency panic and deposit outflows that gripped the bank when a provisional $14bn figure leaked in September.
RBS, with 13% CET1 ratio (AFTER £11.6bn of litigation and conduct provisions) is certainly a fat target, but the bank has no choice — Deutsche’s troubles last year show that a litigation-induced deposit run is a real possibility, while the Bank of England bakes in surplus conduct capital, by stress-testing conduct risk as well as asset quality.
So the bank is a sitting duck — it has to risk a bigger fine by running surplus capital... to protect against the risk of a big fine. It’s painful for the bank’s management, and painful for UK taxpayers as well.