'A stark reminder': RBS agrees £4.2 billion settlement with US over financial crisis misselling

LONDON — Royal Bank of Scotland on Wednesday announced that it has reached a settlement with the US Federal Housing Finance Agency (FHFA) over the misselling of $US32 billion mortgage-backed securities in the run-up to the 2008 financial crisis.

RBS said in a statement on Wednesday lunchtime that it has agreed to pay $US5.5 billion (£4.2 million) to settle with the FHFA, which is withdrawing its legal cases against RBS as part of the settlement.

However, $US754 million (£581 million) will be reimbursed to RBS “under indemnification agreements with third parties,” the bank said, meaning the net cost of the settlement is $US4.75 billion (£3.65 billion).

CEO Ross McEwan says in a statement announcing the settlement:

“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.”

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