Royal Bank of Scotland Reaches $500 Million Settlement Over Mortgage Securities
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 firstname.lastname@example.org
(END) Dow Jones Newswires
March 06, 2018 16:46 ET (21:46 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.