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Royal Bank of Scotland to pay $4.9 billion US subprime fine

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London: Britain’s state-rescued Royal Bank of Scotland said on Thursday that it has been fined $4.9 billion (4.1 billion euros) by the US Justice Department over its role in the subprime crisis. The announcement comes almost a decade after the alleged mis-selling of toxic mortgage-backed securities that precipitated the 2008 financial meltdown.


RBS is one of the last major banks to settle with US regulators over the notorious global financial crisis —which sparked a fierce worldwide recession, millions of job losses, and multi-billion-dollar bank bailouts that gave way to years of state austerity.


Rival British bank Barclays had already reached a $2.0-billion settlement with US regulators, while Germany’s Deutsche Bank and Swiss pair UBS and Credit Suisse have agreed similar crisis-related fines.


“The Royal Bank of Scotland Group plc today announces that it has reached a civil settlement in principle with the US Department of Justice (DOJ) to resolve its investigation into RBS’s issuance and underwriting of US residential mortgage-backed securities between 2005 and 2007,” RBS said in a statement. However, the preliminary settlement still needs to be finalised, with further details set for more negotiation.


Edinburgh-based RBS remains 71 per cent owned by the British government after receiving the world’s biggest banking bailout at the height of the crisis. “Today’s announcement is a milestone moment for the bank,” said chief executive Ross McEwan.


“Reaching this settlement in principle with the US 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.” — AFP


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