RBS to Pay $120 Million to Settle Connecticut Probe
October 03 2016 - 1:30PM
Dow Jones News
Royal Bank of Scotland Group PLC will pay $120 million to settle
a four-year investigation by Connecticut into the U.K. lender's
underwriting of residential mortgage-backed securities before the
2008 financial crisis.
RBS and Connecticut's banking department had reached a
preliminary agreement in June regarding the investigation, an RBS
spokesman said.
He added that the final settlement with Connecticut is covered
under provisions that the bank previously has set aside to cover
such matters. In January, RBS disclosed an additional 2.5 billion
British pounds ($3.21 billion) to cover a slew of regulatory
issues.
"We are pleased to have resolved this matter," the RBS spokesman
said in prepared remarks Monday. "Putting these issues behind us
remains a priority; there is more work to be done, but we are
making progress."
According to the Connecticut attorney general's office, from
early 2005 through 2008, RBS was the main underwriter for 250 RMBS
deals valued at a combined $250 billion and as such was required to
conduct due diligence on pools of mortgages that served as the
underlying collateral.
Connecticut Attorney General George Jepsen said in prepared
remarks that to date the $250 billion of RMBS deals have resulted
in more than $40 billion in losses.
"With today's settlement, we are holding RBS accountable under
Connecticut law for its behavior that contributed significantly to
the 2008 financial crisis," Mr. Jepsen stated.
The state government had alleged that RBS's due diligence
process was inadequate and resulted in inaccurate information being
disclosed to investors regarding the securities products.
The accord comes after RBS last week agreed to pay $1.1 billion
to a U.S. regulator to resolve two civil lawsuits related to the
way it sold mortgage-backed securities in the run-up to the
financial crisis. Last week RBS said the settlement with the
National Credit Union Administration Board was substantially
covered by existing provisions.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
October 03, 2016 13:15 ET (17:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Royal Bank of Scotland (NYSE:RBS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Royal Bank of Scotland (NYSE:RBS)
Historical Stock Chart
From Apr 2023 to Apr 2024