RBS pays $4.9bn for crisis-era misconduct

WASHINGTON: Royal Bank of Scotland will pay $4.9 billion to settle US claims that it misled investors on residential mortgage-backed securities between 2005 and 2008, the US Justice Department said.
The Justice Department said the penalty is the largest-ever imposed on a bank for misconduct leading up to the financial crisis. The bank announced in May that it had reached the settlement in principle.
The government alleges RBS misled investors in underwriting and issuing residential mortgage-backed securities, understating the risks behind many of the loans and providing inaccurate data. “Despite assurances by RBS to its investors, RBS’s deals were backed by mortgage loans with a high risk of default,” Andrew E Lelling, US Attorney for the District of Massachusetts, said in a statement.
The Justice Department said that RBS disputes the allegations and does not admit wrongdoing, although the bank said in a statement it was happy to move on.
“There is no place for the sort of unacceptable behaviour alleged by the DoJ at the bank we are building today,” RBS Chief Executive Ross McEwan said.
In conjunction with the settlement, the bank also said it would be paying out an interim ordinary dividend of 2 pence per share on October 12 to shareholders.
The dividend is the bank’s first since its near-collapse and £45.5 billion ($58 billion) state bailout in 2008. The DOJ settlement and the resumption of dividends were two of the last big milestones in RBS’s decade-long journey back to normality. The looming Justice Department fine had weighed on the bank’s share price and prevented it from paying out to its shareholders. — Reuters