The Royal Bank of Scotland Group  

RBS reaches $4.75bn deal with US authorities

RBS reaches $4.75bn deal with US authorities

Royal Bank of Scotland has reached a $4.75bn (£3.65bn) settlement with US authorities over the sale of mortgage products before the financial crisis.

At around 4pm in London, RBS' share price was down 1.4 per cent to 252p per share.

The settlement has been reached with the Federal Housing Finance Agency, which overseas parts of the secondary mortgage market.

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The issue related to claims by the FHFA surrounding RBS’s issuance and underwriting of around £25bn of residential mortgage-backed securities.

As part of the deal the FHFA will withdraw its outstanding litigations against RBS.

The bank, which is still 71.5 per cent owned by the government, still faces action by the US Department of Justice.

Ross McEwan, the chief executive of RBS, said: “Today's announcement is an important step forward in resolving one of the most significant legacy matters facing RBS and is further evidence of the determination of the bank's leadership to put our remaining issues behind us.

“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.”

Last year RBS agreed to pay a $1.1bn (£854m) settlement as part of a deal with the US National Credit Union Administration Board.

The cost of the settlement with the FHFA will be met from £6.6bn RBS had put aside in order to cover the costs of mortgage-backed securities action.