RBS to Pay $5.5 Billion to Settle Toxic Mortgage Claims in US


The Royal Bank of Scotland has reached a settlement with the United States Federal Housing Finance Agency — regulator of the mortgage finance giants Fannie Mae and Freddie Mac.

Luke MacGregor/Reuters

LONDON — The Royal Bank of Scotland said on Wednesday that it had agreed to pay $5.5 billion to American authorities to resolve claims related to its underwriting and sale of toxic mortgage securities.

The settlement with the Federal Housing Finance Agency — regulator of the mortgage finance giants Fannie Mae and Freddie Mac — partially removes a longtime cloud from over R.B.S., which has tried to resolve continuing litigation as part of its efforts to engineer a turnaround.

The lender, based in Edinburgh, is restructuring as it sells businesses and dismantles its global investment bank to focus on retail and corporate banking in Britain and Ireland. But it is still 72 percent owned by the British government after a bailout during the financial crisis.

R.B.S. said it continued to cooperate with investigations by the United States Justice Department and other American regulators into the sale of mortgage-backed securities, which could lead to further settlements or penalties. Ewen Stevenson, the bank’s chief financial officer, said in a conference call on Wednesday that he could not provide an update on talks with the Justice Department, but that he remained hopeful that the inquiry could be resolved this year.


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The latest settlement relates to $32 billion in so-called residential mortgage-backed securities.

“Today’s announcement is an important step forward in resolving one of the most significant legacy matters facing R.B.S. and is further evidence of the determination of the bank’s leadership to put our remaining issues behind us,” Ross McEwan, the R.B.S. chief executive, said in a news release. “This settlement is a stark reminder of what happened to this bank before the financial crisis, and the heavy price paid for its pursuit of global ambitions.”

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