UK Bank Settles $4.9 Billion RMBS Claim With US Authorities

Robbie Lawther

16 August 2018

Royal Bank of Scotland will pay $4.9 billion to settle claims with the US Justice Department for misleading investors on residential mortgage-backed securities between 2005 and 2008.

The Justice Department said that the penalty is the largest imposed by the department for financial crisis-era misconduct for a single entity under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including wire and mail fraud.

The government alleges that RBS misled investors in underwriting and issuing residential mortgage-backed securities, understating the risks behind many of the loans and providing inaccurate data.

It said that these are allegations only, which RBS disputes and does not admit, and there has been no trial or adjudication or judicial finding of any issue of fact or law.

On Aug 1, the Justice Department struck a settlement with Wells Fargo, which agreed to pay $2.09 billion to settle similar claims.