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RBS to pay $5.5bn to US authorities

Royal Bank of Scotland agreed to pay $5.5 billion USD to United States authorities over its sales of sub-prime mortgage bonds in the lead-up to the 2008 financial crisis.

 

The public-owned bank will pay the penalty from the US Federal Housing Agency as part of long-running disputes with authorities in the US over the sale of bonds backed by toxic mortgages.

 

Prior to the 2008 global financial meltdown, the Scottish bank sold the bonds to US government-backed loan firms Fannie Mae and Freddie Mac.

 

RBS still faces another separate dispute with the US Department of Justice, in which the penalty could be even more harsh.

 

“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,” Ross McEwan, RBS chief executive said

 

“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,” he later added.

 

RBS said it had made previous provisions for the penalty but it would take a further charge in its second quarter of $195 million USD to cover the cost.

Image of RBS from City AM

 

More details to follow.

Published by: The New Union Network

Written By: Eli Ridder

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Categories: News

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