Royal Bank of Scotland Reaches $500 Million Settlement Over Mortgage Securities
March 06 2018 - 5:01PM
Dow Jones News
By Maria Armental
Royal Bank of Scotland Group PLC reached a $500 million
settlement in New York over the bank's misrepresentations to
investors about the quality of home loans it packaged into
mortgage-backed securities at the height of the housing boom.
RBS, which in 2017 reported its first annual profit in a decade,
warned that "legacy conduct issues," such as the residential
mortgage-backed securities, or RMBS, would continue to have major
financial and reputational impacts.
"We have been very clear that putting our remaining legacy
issues behind us is a key part of our strategy," Chief Executive
Ross McEwan said Tuesday in a statement. "Settling these issues is
a stark reminder of the heavy price we continue to pay for the
global ambitions pursued by the bank in the run up to the
crisis."
The bank has reached similar settlements with the Securities and
Exchange Commission, the Federal Housing Finance Agency and other
states, including California and Connecticut. Still looming over
it, however, is a related matter from the U.S. Department of
Justice.
The Justice Department has reached multibillion-dollar
settlements over toxic mortgage-backed securities with other big
banks, including Deutsche Bank and Credit Suisse.
The settlement signed Tuesday follows a New York state
investigation into residential mortgage-backed security offerings
by RBS and U.S. subsidiaries before Jan. 1, 2009.
Under terms of the civil settlement, the bank, which didn't
admit liability, acknowledged that investors had been misled over
the quality of the underlying mortgages, which resulted in billions
of dollars of collateral losses and contributed to the crash in
home values during the financial crisis.
The bank agreed to pay $100 million to New York state and
offered $400 million worth of consumer relief for New York
homeowners and communities.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
March 06, 2018 16:46 ET (21:46 GMT)
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