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RBS reaches $500 million settlement with New York over mortgage securities

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Staff Writer |
RBS
Banking   44 securities offerings

Royal Bank of Scotland Group (RBS) has reached a $500 million settlement with New York state to resolve charges it misled investors by selling risky mortgage securities that contributed to the 2008 global financial crisis.

The settlement announced on Tuesday by New York Attorney General Eric Schneiderman calls for the British bank to pay $100 million in cash to the state and provide $400 million of relief to homeowners and communities, including funds to build affordable housing.

RBS is the sixth bank to settle similar claims by New York, resulting in roughly $3.7 billion of settlements.

JPMorgan Chase & Co (NYSE: JPM), Bank of America Corp (NYSE: BAC), Citigroup Inc (NYSE: C), Morgan Stanley (NYSE: MS) and Goldman Sachs Group Inc (NYSE: GS) have also settled, with JPMorgan's roughly $1 billion accord in November 2013 the largest, the attorney general's office said.

RBS admitted to having in 2006 and 2007 misled investors into believing the residential mortgage-backed securities it sold were properly underwritten and complied with applicable laws and regulations.

The New York probe had focused on 44 securities offerings worth more than $52 billion, including many that plummeted in value as housing and financial markets fell into distress.

RBS last month said it has set aside 3.2 billion pounds (US$4.4 billion) to cover potential settlements with the U.S. Department of Justice and other regulators over RMBS sales.


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