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Mega fines will hurt European bank dividends


Barclays Bank

Barclays Bank

Barclays Bank

Europe’s banks face a further €37bn of legal costs as fines on this side of the Atlantic catch up with those in the US, according to analysts at Morgan Stanley.

Banks which have already set aside or paid out more than $80bn since 2009, face about €95bn of litigation and settlement costs in total, analysts

led by Huw van Steenis wrote in a note to clients.

US firms which have so far made provisions for or paid out €92bn, may have only to set aside a further €18bn, the analysts said.

Barclays and Royal Bank of Scotland face the largest increases in legal costs among European banks, Mr van Steenis said.

Barclays, Britain’s second-largest bank, will have about €8.75bn of additional legal costs through 2016, compared with the €7.35bn it’s already set aside or paid out since 2009.

RBS’s legal bills may rise by €8.3bn over the same period from €8.6bn, he added.

Fines are likely to hurt the industry’s ability to pay dividends in coming years, he said. (Bloomberg)

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