RBS admits no fault but settles with US regulator over selling of toxic products
The Royal Bank of Scotland (RBS) has agreed to pay $1.1bn (£845m) of penalties to US authorities in order to settle claims that it mis-sold mortgage-backed securities to corporate credit unions.
The US National Credit Union Administration (NCUA) announced the settlement overnight but stressed that under the arrangement the embattled British lender did not admit fault. It is the second deal struck between the two parties, the first being $130m to settle a separate lawsuit filed in New York in 2015.
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Rick Metsger of the NCUA welcomed the agreement and said:
“[The NCUA will] pursue recoveries against financial firms that we maintain contributed to the corporate crisis."
RBS has set aside £4bn to settle legal disputes in relation to its mis-selling of mortgage-backed securities on the run up to 2008. This provision does not cover penalties from other on-going investigations by the US Department of Justice.
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The bailed-out bank also is facing further multi-billion dollar legal action from the conservator of Fannie Mae and Freddie Mac – the US Federal Housing Finance Agency – in relation to RBS’s activities on the run up to the demise of the two government-sponsored enterprises.
The NCUA has now fined various banks a total of $4.3bn since the 2008 financial crisis of their involvement in sales of various mortgage-backed products.
The organisation is still in the process of litigating against other banks – including Credit Suisse and UBS – over the sale of such products to corporate credit unions.
Meanwhile, Sky News reported today that the Treasury had appointed an investment bank to assess what could be done to offload RBS’s Williams & Glyn’s network.
The Treasury has declined to comment.