RBS agrees £3.6bn settlement over USA mortgage-backed securities

RBS agrees £3.6bn settlement over USA mortgage-backed securities

Royal Bank of Scotland said Thursday it has agreed to pay $4.9 billion (£3.6bn) to settle US claims that it misled investors who bought securities backed by risky mortgages in the run up to the 2008 financial crisis. Additionally, USD 1.44 billion would be taken as an incremental charge in the second quarter of the year to settle the rest. It's "a milestone moment" and "the price we have to pay for the global ambitions pursued by this bank before the crisis".

The latest settlement follows a 5.5 billion USA dollars (£4.1 billion) USA penalty agreed with the Federal Housing Finance Agency last July.

The owner of Ulster Bank has agreed to pay the US Department of Justice US$4.9bn (€4.12bn) as part of a settlement.

"Further details remain to be negotiated, however, before a formal agreement", it said.

The government bailed out RBS after the 2007 to 2008 financial crisis when, by some measures, it was the biggest bank in the world.

Accern also assigned news stories about the financial services provider an impact score of 44.8826495689191 out of 100, meaning that recent media coverage is somewhat unlikely to have an effect on the stock's share price in the near future.

McEwan said the deal "makes it easier for the Government to have a clean bank to sell". Even now, the settlement in principle with the U.S. Department of Justice isn't binding, "and there can be no assurance" both sides will agree on final terms, RBS said in the statement.

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This meant that the United Kingdom government was unable to sell of any of its shares in the company.

But McEwan stressed that the timing of selling the stake is in the government's hands.

In a report shared with investors and clients this morning, Shore Capital restate their Hold rating on Royal Bank of Scotland Group The PLC (LON:RBS) shares.

RBS executives said one reason for the settlement being below estimates was that RBS did not have to pay out billions of dollars in consumer relief, a staple of such settlements under the Obama administration.

Last December, it also agreed to pay $125 million to resolve claims that it made misrepresentations while selling mortgage-backed securities to two large California pension funds.

But he said the bank is "getting back into very good shape", following a strong first quarter and after it booked a bottom-line annual profit for the first time in a decade earlier this year.

Stein, the Bloomberg Intelligence analyst, said that "RBS's billions in payments to other agencies and states no doubt played a role in its less-than-expected DoJ settlement".

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