A government investigation into The Royal Bank of Scotland Group plc’s role in securitizing home loans will be resolved through a multi-billion-dollar settlement.
The investigation focuses on RBS’ issuance and underwriting of residential mortgage-backed securities that were securitized between 2005 and 2007.
So, in order to put an end to the investigation, the U.K.-based financial institution announced a civil settlement in principle with the U.S. government.
The agreement with the Department of Justice
requires that RBS pay a $4.9 billion civil money penalty. RBS noted that it has already made provisions for $3.46 billion of the charges.
“Today’s announcement is a milestone moment for the bank,” RBS Chief Executive Officer Ross McEwan said in today’s statement. “Reaching this settlement in principle with the U.S. Department of Justice will, when finalised, allow us to deal with this significant remaining legacy issue and is the price we have to pay for the global ambitions pursued by this bank before the crisis.
“Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer.”
The proposed settlement still requires a legally binding agreement be drafted and that RBS and the Justice Department agree on the final terms.
