Quantcast

Legacy conduct issue: RBS agrees to $500m settlement for 2008 mis-selling

0

The settlement comprises of $100m in cash, with the remaining $400m to go towards consumer relief

Just a month after reporting its first annual profit in a decade, one of the legacy conduct issues has come back to haunt Royal Bank of Scotland (RBS).

The state-backed lender has agreed a $500m (£360m) settlement with New York state over sale of retail mortgage-backed securities (RMBS) ahead of the 2008 financial crisis.

Ross McEwan, the chief executive of RBS, said the settlement was a sign it was putting its remaining legacy issues behind it. “Settling these issues is a stark reminder of the heavy price we continue to pay for the global ambitions pursued by the bank in the run up to the crisis,” he said.

According to media reports, the settlement comprises of $100m in cash, with the remaining $400m to go towards consumer relief for communities and homeowners.

New York attorney general Eric Schneiderman announced: “While the financial crisis may be behind us, New Yorkers are still feeling the effects of the housing crash. Home values plummeted. Vacant homes consumed neighborhoods. And for many New Yorkers, affordable housing fell out of reach. Today’s settlement is another important step in our comprehensive effort to help New Yorkers rebuild their lives and communities.”

The lender, accortding to Schneiderma, admitted to having sold investors RMBS that did not meet underwriting guidelines, contrary to its representations, and did not comply with applicable laws and regulations.

The news comes as the bank is expected to reach a separate agreement with the US DoJ shortly.

 




Share.