Royal Bank of Scotland Agrees £4.2bn Settlement Over 'Mis-Selling' In US
12 July 2017, 15:17
Royal Bank of Scotland has agreed a 5.5 billion US dollar (£4.2 billion) settlement over mis-selling claims in the US as it looks to move on from legacy woes.
The taxpayer-backed lender agreed the deal with the Federal Housing Finance Agency, seeing it take a major step towards drawing a line under the mis-selling claims from the run-up to the financial crisis.
While the bank has agreed to pay £4.2 billion in total, 754 million US dollars (£581 million) of the settlement will be paid under indemnification agreements with third parties.
Ross McEwan, chief executive of RBS, said it was ''an important step forward in resolving one of the most significant legacy matters facing RBS''.
''This settlement is a stark reminder of what happened to this bank before the financial crisis, and the heavy price paid for its pursuit of global ambitions,'' he added.
The agreement with the Federal Housing Finance Agency (FHFA) sees RBS resolve one of the two major long-awaited settlements with US regulators over its selling practices of toxic mortgage-backed securities.
It is still to agree a settlement with the Department of Justice, as well other smaller claims related to mortgage-backed security mis-selling.
The expected fines have weighed heavy on the bank amid fears over the size of the settlements.
RBS said the net £3.65 billion cost of the settlement with the FHFA would be largely covered by funds set aside.
But it will take a 196 million US dollar (£151 million) charge in its second quarter results for the deal.
RBS had already put £6.6 billion by to cover US mis-selling claims.
RBS finance chief Ewen Stevenson said the FHFA settlement was ''in the region of what we'd been anticipating''.
Shares lifted more than 1% after the settlement was announced.