RBS Agrees to $5.5 Billion Settlement Over Sale of Mortgage Securities During Crisis
July 12 2017 - 9:33AM
Dow Jones News
By Max Colchester
LONDON -- Royal Bank of Scotland Group PLC on Wednesday agreed
to pay $5.5 billion to the U.S. Federal Housing Finance Agency to
settle a probe into its sale of toxic mortgage-backed securities in
the run up to the financial crisis.
RBS said in a statement that it had already set aside funds to
cover most of the cost of the settlement. The 71% U.K. government
owned bank will have to take an additional charge of $196 million
which will be realized in its coming results in August.
RBS had set aside $8.3 billion to cover a range of allegations
linked to its role in packaging and selling on subprime mortgages
in the lead up to the financial crisis. The bank still faces probes
from several U.S. agencies including a criminal and civil
investigation by the U.S. Department of Justice.
Settling these probes is a major hurdle for RBS as it continues
its slow return to private hands. U.K. government officials have
said they would not sell down the government's stake until they
have clarity on the size of the U.S. fines RBS may face. RBS warned
Wednesday that "further substantial provisions and costs may be
recognized...depending upon the final outcomes."
Under the settlement, RBS will pay the FHFA $5.5 billion but is
eligible for a $754 million reimbursement under indemnification
agreements with third parties.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
July 12, 2017 09:18 ET (13:18 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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