Royal Bank of Scotland will pay $ 5.5 billion to settle one of two high-profile lawsuits in the US that accused the bank of selling high-risk mortgage bonds, after which the British government will be able to sell its shares in the bank.
The Edinburgh-based bank said on Wednesday it agreed to settle the claims of the US Federal Agency for Housing Finance (FHFA), which accused RBS of selling high-risk mortgage bonds worth $32 billion before the global financial crisis.
Analysts previously predicted that, in order to settle the case, the bank will have to pay from $3.5 to $5 billion.
"Today's announcement is an important step forward in the resolution of one of the most significant issues of the legacy," said RBS head Ross McEwen.
McEwen is trying to clean up the RBS balance and put an end to a series of court cases so that the government can sell more than 70% of the shares of the creditor owned by the authorities after saving the bank during the financial crisis, which cost 46 billion pounds ($ 59.6 billion).
RBS said that other parties will reimburse about $754 million in costs, and existing reserves will almost completely cover the penalty.
The bank added that it will reflect in the financial results for the second quarter, which will be published in August, a write-off amounting to 151 million pounds due to a fine.
This lawsuit against RBS is the largest and most recent of 18 filed by the FHFA in 2011 in connection with the sale by various banks of mortgage bonds worth $ 200 billion to US mortgage agencies Fannie Mae and Freddie Mac.
Before that, the FHFA has got $ 17.87 billion for settling most of the lawsuits, including $ 5.83 billion from Bank of America Corp (NYSE: BAC) and $ 4 billion from JPMorgan Chase & Co (NYSE: JPM).
FHFA claims that RBS provided Fannie Mae and Freddie Mac with inauthentic information when selling mortgage bonds, which resulted in serious losses for the agencies.