LONDON (AP) — Royal Bank of Scotland said Wednesday it has reached a $5.5 billion settlement in the United States over mortgage-backed securities issued before the financial crisis.
The deal with the Federal Housing Finance Agency — the conservator of Fannie Mae and Freddie Mac — resolves claims regarding the issuance and underwriting of approximately $32 billion (25 billion pounds) of residential mortgage-backed securities.
RBS CEO Ross McEwan says the announcement is “an important step forward in resolving one of the most significant legacy matters facing RBS.”
McEwan has been at pains in recent months to insist RBS has put its legacy issues behind it. The bank was bailed out at the height of the financial crisis and is now owned by the British taxpayer.
“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,” McEwan said.
Under the settlement, RBS will pay $5.5 billion, but be reimbursed for $754 million under indemnification agreements with third parties.
The cost is largely covered by money it had already set aside. It will take an extra charge of $196 million.