RBS Pays $1.1 Billion to Settle Lawsuits in U.S.
September 28 2016 - 4:20AM
Dow Jones News
LONDON—Royal Bank of Scotland Group PLC has agreed to pay $1.1
billion to a U.S. regulator to resolve two civil lawsuits over the
way it sold mortgage-backed securities in the run-up to the
financial crisis.
The U.K. lender said the settlement with the National Credit
Union Administration Board is substantially covered by existing
provisions and will have no material impact on its common equity
Tier 1 ratio—a measure of high-quality capital as a share of
risk-weighted assets.
However, the bank continues to face other claims over the
alleged mis-selling of mortgage-backed securities before its £ 45.5
billion ($59.22 billion) government bailout in 2008.
RBS remains under investigation by the U.S. Justice Department,
and the bank said future provisions could be "materially in excess"
of those existing as of June 30.
The development comes less than two weeks after the U.S. Justice
Department proposed Deutsche Bank AG pay $14 billion to settle a
set of high-profile mortgage-securities probes stemming from the
financial crisis. However, the German lender has said it wouldn't
pay anywhere close to that figure and that it intends to manage its
challenges by itself.
Big U.S. banks have also paid multibillion-dollar settlements
for allegedly misleading investors about the quality of such
securities.
The largest so far has been $16.65 billion paid by Bank of
America Corp. in 2014. Goldman Sachs Group Inc. agreed in April to
a $5 billion deal that included a $2.4 billion cash penalty plus a
pledge of $1.8 billion to help struggling borrowers and communities
hard hit by the 2008 collapse in home prices.
(END) Dow Jones Newswires
September 28, 2016 04:05 ET (08:05 GMT)
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