Royal Bank of Scotland’s US retail subsidiary agreed to pay $137.5m to settle allegations it overcharged customers with excess overdraft fees.
The settlement on Wednesday, which has to be approved by a judge, follows previous settlements on the issue between bank customers and groups including Bank of America and JPMorgan Chase. Several other banks are still in talks.
The class-action lawsuit said Citizens Financial Group, a unit of RBS, had a practice of “re-sequencing debit card transactions from highest to lowest” so that customers were more likely to trigger overdraft fees of $39 a time.
Citizens did not admit wrongdoing in the settlement. The bank, based in Rhode Island, is wholly owned by RBS, which is itself majority-owned by the UK government after the bank’s bailout in the financial crisis.
Robert Gilbert, a lawyer with Grossman Roth, who co-ordinates the cases against all the banks said it was “an outstanding recovery for Citizens’ customers who were affected by this practice”.
Citizens said it was “pleased to have this matter behind us”.
The payment from Citizens is relatively large compared with the size of the bank. While Citizens has about $130bn in assets, JPMorgan Chase, 17 times bigger, agreed to pay only $110m.
People working on the cases said that was because JPMorgan had a better prospect of pushing the case into arbitration hearings, which are generally seen as more difficult venues for customer claimants.