RBS Pays $1.1 Billion to Settle Lawsuits in U.S.

LONDON—Royal Bank of Scotland Group PLC has agreed to pay $1.1 billion to a U.S. regulator to resolve two civil lawsuits over the way it sold mortgage-backed securities in the run-up to the financial crisis.

The U.K. lender said the settlement with the National Credit Union Administration Board is substantially covered by existing provisions and will have no material impact on its common equity Tier 1 ratio—a measure of high-quality capital as a share of risk-weighted assets.

However, the bank continues to face other claims over the alleged mis-selling of mortgage-backed securities before its £ 45.5 billion ($59.22 billion) government bailout in 2008.

RBS remains under investigation by the U.S. Justice Department, and the bank said future provisions could be "materially in excess" of those existing as of June 30.

The development comes less than two weeks after the U.S. Justice Department proposed Deutsche Bank AG pay $14 billion to settle a set of high-profile mortgage-securities probes stemming from the financial crisis. However, the German lender has said it wouldn't pay anywhere close to that figure and that it intends to manage its challenges by itself.

Big U.S. banks have also paid multibillion-dollar settlements for allegedly misleading investors about the quality of such securities.

The largest so far has been $16.65 billion paid by Bank of America Corp. in 2014. Goldman Sachs Group Inc. agreed in April to a $5 billion deal that included a $2.4 billion cash penalty plus a pledge of $1.8 billion to help struggling borrowers and communities hard hit by the 2008 collapse in home prices.

(END) Dow Jones Newswires

September 28, 2016 04:05 ET (08:05 GMT)

Bank of America (NYSE:BAC)
Historical Stock Chart
From Mar 2024 to Apr 2024