TIDMRBS TIDM61ZU
RNS Number : 8869K
Royal Bank of Scotland Group PLC
12 July 2017
The Royal Bank of Scotland Group plc
Settlement reached with the Federal Housing Finance Agency
regarding US RMBS claims
12 July 2017
The Royal Bank of Scotland Group plc (together with its
subsidiaries, "RBS") has reached a settlement with the Federal
Housing Finance Agency ("FHFA") as conservator of Fannie Mae and
Freddie Mac, to resolve claims by FHFA in relation to RBS's
issuance and underwriting of approximately US$32 billion (GBP25
billion) of residential mortgage-backed securities ("RMBS") in the
US. As part of the settlement, FHFA's outstanding litigation
against RBS will be withdrawn.
Ross McEwan, RBS CEO, 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."
Financial Impact of the FHFA settlement
Under the settlement, RBS will pay FHFA US$5.5 billion (GBP4.2
billion), of which US$754 million (GBP581 million) will be
reimbursed to RBS under indemnification agreements with third
parties.
The cost to RBS (net of the indemnity mentioned above) of
US$4.75 billion (GBP3.65 billion) is largely covered by existing
provisions. An incremental charge of US$196 million (GBP151
million) will be recorded in the RBS Q2 2017 results which will be
published on 4 August 2017.
As at end Q1 2017, RBS held a provision of US$8.3 billion
(GBP6.6 billion) against RMBS, of which $4.55 billion (GBP3.6
billion) related to FHFA and the remainder principally relates to a
number of the matters described below.
Ongoing Legacy Inquiries and Litigation
RBS is one of 17 financial institutions to have settled RMBS
claims filed by FHFA. Following this settlement, RBS's unresolved
RMBS litigation matters involve the issuance of less than US $1
billion of RMBS issued primarily from 2005 to 2007, assuming court
approval of an agreed and provided for settlement. This unresolved
amount does not include the FHFA case involving RMBS issued by
Nomura, which RBS estimates its net exposure as approximately US
$383 million (GBP295 million) and intends to pursue indemnification
for. This net exposure was also included within RMBS related
provisions as at Q1 2017.
As previously disclosed, RBS continues to cooperate with RMBS
related investigations and proceedings (both formal and informal)
by federal and state governmental law enforcement and other
agencies including the US Department of Justice ("DOJ") and various
other members of the RMBS Working Group of the US Financial Fraud
Enforcement Task Force. The duration and outcome of these
investigations, including in particular the DOJ's civil and
criminal investigations, and other RMBS litigation matters remain
uncertain, including in respect of whether settlements for all or
any of such matters may be reached.
RBS is not making any other adjustments to existing provisions
relating to RMBS matters as a result of today's settlement but
continues to advise that further substantial provisions and costs
may be recognised and, depending upon the final outcomes, other
adverse consequences may occur. Please see RBS's 2016 Annual Report
and Accounts for further information on these outstanding
investigations and litigation matters.
Investor call
Ewen Stevenson (Chief Financial Officer) will host a conference
call for investors and analysts at 14.30 BST. A replay of the call
will be made available shortly afterwards. Only items relating to
the above announcement will be discussed on the call; there will be
no references and discussion relating to other matters and the Q2
2017 results.
Dial-in details:
UK: 0800 694 8082
International: +44 (0) 1452 568 172
US: +1 866 966 8024
Conference ID: 54462050
Replay details:
UK FreeCall: 0800 953 1533
Std International: +44 (0)1452 550 000
USA FreeCall: +1 (866) 247 4222
Conference ID: 54462050
For further information, please contact:
RBS Investor Relations
+44 (0) 20 7672 1758
RBS Media Relations
+44 (0) 131 523 4205
Forward Looking Statements
This announcement contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including those related to RBS and its subsidiaries' regulatory
capital position, risk-weighted assets, impairment losses and
credit exposures under certain specified scenarios. In addition,
forward-looking statements may include, without limitation,
statements typically containing words such as "intends", "expects",
"anticipates", "targets", "plans", "estimates" and words of similar
import. These statements concern or may affect future matters, such
as RBS's future economic results, business and capital plans and
current strategies. Forward-looking statements are subject to a
number of risks and uncertainties that might cause actual results
and performance to differ materially from any expected future
results or performance expressed or implied by the forward-looking
statements. Factors that could cause or contribute to differences
in current expectations include, but are not limited to,
legislative, fiscal and regulatory developments, competitive
conditions, technological developments, exchange rate fluctuations
and general economic conditions. These and other factors, risks and
uncertainties that may impact any forward-looking statement or
RBS's actual results are discussed in RBS's UK annual report and
accounts and interim reports and materials filed with, or furnished
to, the US Securities and Exchange Commission, including, but not
limited to, RBS's Reports on Form 6-K and most recent Annual Report
on Form 20-F. The forward-looking statements contained in this
announcement speak only as of the date of this announcement and RBS
does not assume or undertake any obligation or responsibility to
update any of the forward-looking statements contained in this
announcement, whether as a result of new information, future events
or otherwise, except to the extent legally required.
MAR
This announcement contains information that qualified or may
have qualified as inside information for the
purposes of Article 7 of the Market Abuse Regulation (EU)
596/2014 (MAR). For the purposes of MAR and Article 2 of Commission
Implementing Regulation (EU) 2016/1055, this announcement is made
by Matt Waymark, Head of Investor Relations for The Royal Bank of
Scotland Group.
LEI - The Royal Bank of Scotland Group plc -
2138005O9XJIJN4JPN90
LEI - The Royal Bank of Scotland plc - RR3QWICWWIPCS8A4S074
This information is provided by RNS
The company news service from the London Stock Exchange
END
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