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RBS has settlement with the Federal Housing Finance Agency, will pay $5.5 billion

Staff Writer | July 13, 2017
The Royal Bank of Scotland Group (RBS) has reached a settlement with the Federal Housing Finance Agency (FHFA) as conservator of Fannie Mae and Freddie Mac.
Royal Bank of Scotland
Banking   Issuance and underwriting
This is to resolve claims by FHFA in relation to RBS’s issuance and underwriting of approximately $32 billion (£25 billion) of residential mortgage-backed securities (“RMBS”) in the U.S.

As part of the settlement, FHFA’s outstanding litigation against RBS will be withdrawn.

Under the settlement, RBS will pay FHFA $5.5 billion (£4.2 billion), of which $754 million (£581 million) will be reimbursed to RBS under indemnification agreements with third parties.

The cost to RBS (net of the indemnity mentioned above) of $4.75 billion (£3.65 billion) is largely covered by existing provisions. An incremental charge of $196 million (£151 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 $8.3 billion (£6.6 billion) against RMBS, of which $4.55 billion (£3.6 billion) related to FHFA and the remainder principally relates to a number of the matters