RBS agrees $1.1bn deal with US regulator over mis-sold mortgage bonds

RBS agrees $1.1bn deal with US regulator over mis-sold mortgage bonds

Royal Bank of Scotland is to pay $1.1bn (€979m) to a US regulator to settle two claims over mis-sold mortgage bonds in the run-up to the financial crisis.

The taxpayer-backed lender reached the agreement with the National Credit Union Administration Board, which regulates credit unions in America.

RBS sold the mortgage securities to the US Central Federal Credit Union and Western Corporate Federal Credit Union, but the bonds later proved toxic and failed after the US housing bubble burst in 2008.

The bank, which does not admit fault under the deal, said the settlement is "substantially" covered by the £3.8bn (€4.4bn) already put aside to cover upcoming litigation.

But RBS still faces potentially mammoth settlements over mis-selling of mortgage securities turned sour in the US, with claims still outstanding with the Federal Housing Finance Agency and US Department of Justice (DoJ).

RBS boss Ross McEwan said at a conference in London on Tuesday that the group was working to resolve outstanding claims this year and into 2017, but warned it could create "substantial additional conduct provisions and noise".

Banking experts believe the DoJ settlement could total around £9bn (€10.4bn).

Its shares have been under pressure after the DoJ hit German rival Deutsche Bank with a $14bn (€12.4bn) penalty for mis-selling mortgage-backed securities.

Fears over the impact on Deutsche Bank have sent its shares tumbling close to 30-year lows.

RBS, which is still 73% owned by the Government, reiterated in the latest settlement announcement that ongoing lawsuits might force it to put more cash aside.

More in this Section

Insurance costs forces another children's activity centre to 'hit the wall'Insurance costs forces another children's activity centre to 'hit the wall'

Business movers: The biggest appointments in Irish business this weekBusiness movers: The biggest appointments in Irish business this week

Savoy Cinema owner objects to developer’s planSavoy Cinema owner objects to developer’s plan

Apple Pay may be scrutinised by EU’s VestagerApple Pay may be scrutinised by EU’s Vestager


Lifestyle

Concerns about people’s ability to access their own money have been growing – here’s what the debate is all about.Are we actually going to end up as a cashless society?

Esther N McCarthy mixes it up with spins on kitchen classics, Munster-based design news plus an absolute diamond of a poufMade in Munster: Wish list of the best products in the province

Clodagh Finn visits UCC’s world-leading microbiome centre, where researchers are exploring new ways to use intestinal bacteria to improve our mental and physical health, including the possibility of developing a probiotic capsule to help control weightMade in Munster: Harvesting power of gut bacteria

More From The Irish Examiner