Royal Bank of Scotland Group Plc will pay $1.1 billion to resolve a U.S. regulator's claims that it sold toxic mortgage-backed securities to credit unions that later failed, the U.S. National Credit Union Administration said on Tuesday.

The settlement brings the agency's recoveries against various banks to $4.3 billion in lawsuits over their sale of mortgage-backed securities before the 2008 financial crisis. (Reporting by Nate Raymond in New York; Editing by Bill Rigby) </s> Royal Bank of Scotland has agreed to pay $1.1 billion (£846 million) to settle two lawsuits in the US over the sale of toxic residential mortgage-backed securities.

The state-backed lender said the settlement, over claims made on behalf of the US Central Federal Credit Union and Western Corporate Federal Credit Union, were “substantially covered” by existing provisions and would have “no material impact” on the strength of its balance sheet.

However, the Edinburgh-based group said it faces a number of other civil lawsuits and criminal investigations in the US surrounding the sale of the securities, and warned it may have to set aside yet more money in response. Announcing its half-year results last month, RBS said it had racked up more than £1.3bn of “litigation and conduct costs” during the six months to the end of June.

The bank said that litigation and investigations surrounding the sale of residential mortgage-backed securities “may require additional provisions in future periods that in aggregate could be materially in excess of the provisions existing as of 30 June 2016”.

Meanwhile, RBS chief executive Ross McEwan told a banking conference in London yesterday that the group would be in “uncharted territory” if it fails to sell its 300-branch Williams & Glyn division by the end of this year.

The group, which is 73 per cent owned by the UK government, has to dispose of the business by the end of 2017 to meet state aid rules over the £45bn taxpayer bailout it received at the height of the financial crisis. Spanish rival Santander has twice made moves for the unit, but walked away last week amid a disagreement about pricing.

RBS last month reported a loss of £2bn for the first half of the year, compared with a £179m loss a year earlier, after being hit by extra restructuring costs and an increased bill for mis-sold payment protection insurance. It is due to report its third-quarter results on 28 October.

Click here to ‘Like’ The Scotsman Business on Facebook </s> Royal Bank of Scotland is to pay $1.1 billion to a US regulator to settle two claims over mis-sold mortgage bonds in the run-up to the financial crisis.

The taxpayer-backed lender reached the agreement with the National Credit Union Administration Board, which regulates credit unions in America.

RBS sold the mortgage securities to the US Central Federal Credit Union and Western Corporate Federal Credit Union, but the bonds later proved toxic and failed after the US housing bubble burst in 2008.

The bank, which does not admit fault under the deal, said the settlement is “substantially” covered by the £3.8 billion already put aside to cover upcoming litigation.

But RBS still faces potentially mammoth settlements over mis-selling of mortgage securities turned sour in the US, with claims still outstanding with the Federal Housing Finance Agency and US Department of Justice (DoJ).

RBS boss Ross McEwan said at a conference in London on Tuesday that the group was working to resolve outstanding claims this year and into 2017, but warned it could create “substantial additional conduct provisions and noise”.

Banking experts believe the DoJ settlement could total around £9 billion.

Its shares have been under pressure after the DoJ hit German rival Deutsche Bank with a $14 billion penalty for mis-selling mortgage-backed securities.

Fears over the impact on Deutsche Bank have sent its shares tumbling close to 30-year lows.

RBS, which is still 73 per cent owned by the Government, reiterated in the latest settlement announcement that ongoing lawsuits might force it to put more cash aside. </s> NEW YORK (Reuters) - Royal Bank of Scotland Group Plc will pay $1.1 billion to resolve claims that it sold toxic mortgage-backed securities to credit unions that later failed, the U.S. National Credit Union Administration (NCUA) said.

The logo of the Royal Bank of Scotland (RBS) is seen at an office building in Zurich March 27, 2015. REUTERS/Arnd Wiegmann/Files - RTSL56D

The resolution comes as RBS prepares to settle a number of U.S. cases where it is accused of mis-selling mortgage-backed bonds and brings the U.S. regulator’s recoveries against various banks to $4.3 billion over their sales of such securities before the 2008 financial crisis.

NCUA Board Chairman Rick Metsger said the regulator plans to continue “to pursue recoveries against financial firms that we maintain contributed to the corporate crisis.”

This case is included in the around $5 billion RBS has set aside to settle historic misconduct charges, but some analysts estimate the total claims will be much larger.

The settlement on Tuesday resolves lawsuits filed in federal courts in California and Kansas in the NCUA’s role as the liquidating agent for Western Corporate Federal Credit Union and U.S. Central Federal Credit Union.

Under the settlement, RBS does not admit fault, the NCUA said in a statement. The settlement comes on top of a prior deal in 2015 in which RBS agreed to pay $129.6 million to resolve a similar federal lawsuit the NCUA filed in New York.RBS shares were up 0.4 percent at 175.3 pence at 0934 GMT on Wednesday following the announcement on Tuesday. Gary Greenwood, an analyst a Shore Capital, said the latest settlement is largely provisioned for and will not have a material impact on profit estimates.

However, he said future settlements with the U.S. Department of Justice and the Federal Housing Finance Agency could be substantially larger and these disputes will need to be resolved before the bank can resume dividend payments. RBS in total still faces about 13 other civil litigation cases for alleged mis-selling of asset-backed securities, according to a source at the bank.

RBS in January said it had set aside 3.8 billion pounds ($4.95 billion) to resolve civil lawsuits over mortgage-backed securities, investment products packaged and sold before the U.S. housing meltdown and financial crisis in 2008.

RBS had said that provision did not cover ongoing investigations by the Department of Justice or various state attorneys general.

The bank also faces a multi-billion dollar lawsuit by the U.S. Federal Housing Finance Agency, which has acted as the conservator for mortgage giants Fannie Mae and Freddie Mac since their government takeover in 2008.

An RBS spokesman pointed to comments that RBS CEO Ross McEwan made at a conference in London on Tuesday, in which he said the bank was working toward resolving various mortgage bond claims over the remainder of this year and next.

The NCUA said it continues to litigate against other banks, including Credit Suisse and UBS, over what it says was their sale of faulty mortgage-backed securities to corporate credit unions.

($1 = 0.7683 pounds) </s> Britain's government says it intends to sell part of its stake in taxpayer-owned Royal Bank of Scotland to investors.

The decision comes only weeks after the bank, which was bailed out during the financial crisis, announced it had agreed to pay $4.9 billion to settle U.S. claims that it misled investors who bought securities backed by risky mortgages in the run up to the 2008 financial crisis.

That tentative settlement with the U.S. Department of Justice marked a watershed moment for RBS because the government insisted that the U.S. claims had to be resolved before it could sell its stake.

The government expects to sell about 925 million shares, equivalent to a 7.7 percent stake. That will reduce the government holding from about 70.1 percent to 62.4 percent. </s> LONDON (dpa-AFX) - Royal Bank of Scotland Group Plc (RBS) will pay $1.1 billion to settle National Credit Union Administration claims that it sold faulty mortgage-backed securities to U.S. credit unions.



RBS sold the securities to two credit unions, which failed after the US housing bubble burst in 2008.



RBS, which under the deal does not admit fault, said payment was covered 'substantially by existing provisions'. The settlement won't have a material impact on the bank's capital. Among outstanding civil and criminal actions against RBS are claims from the US Department of Justice and the Federal Housing Finance Agency.



Copyright RTT News/dpa-AFX </s> UK government to sell $3.5B stake in Royal Bank of Scotland

LONDON (AP) — Britain's government says it intends to sell a 2.6 billion pound ($3.5 billion) part of its shareholding in taxpayer-owned Royal Bank of Scotland Group to institutional investors.

The decision comes only weeks after the bank, which was bailed out during the financial crisis, announced it had agreed to pay $4.9 billion to settle U.S. claims it misled investors who bought securities backed by risky mortgages in the run up to the 2008 financial crisis.

The tentative settlement with the U.S. Department of Justice marked a watershed moment for RBS, which was bailed out by British taxpayers after a series of acquisitions briefly made it the largest bank in the world before it collapsed a decade ago. The British government insisted that the U.S. claims had to be resolved before it could sell its stake in RBS.

UK Government Investments, which manages the government's stake in the lender, said it will sell approximately 925 million shares, equivalent to a 7.7 percent stake. At Monday's share price of about 281 pence each, it puts the value of the sale at 2.6 billion pounds.

That will reduce the government holding from about 70.1 percent to 62.4 percent.

The government sold 5.4 percent of the bank in 2015 for 330 pence each — far less than the 502 pence that the government paid for them. But the government has also expressed a wish to return the bank to private ownership. </s> The claim against Deutsche, which is likely to be negotiated in several months of talks, far outstrips the bank's and investors' expectations for such costs.

While it is yet to become clear what the final payment will be, if it were to be as high as $14 billion, this would be a severe strain for Deutsche's fragile finances and would likely further rock investor confidence in the bank.

"Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts", Deutsche Bank said in a statement on Friday.

The Department of Justice declined to comment.

The Department of Justice has taken a tough stance in settlement negotiations with other banks, requesting sums higher than the eventual fine.

In 2014, it asked Citigroup ( ) to pay $12 billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said. The fine eventually came in at $7 billion.

In a similar case, rival Goldman Sachs ( ) agreed in April to pay $5.06 billion to settle claims that it misled mortgage bond investors during the financial crisis.

That settlement included a $2.39 billion civil penalty, $1.8 billion in other relief, including funds for homeowners whose mortgages exceed the value of their property, and an $875 million payment to resolve claims by cooperative and home loan banks among others.

Deutsche Bank's settlement will comprise a different list of recipients, a source close to the matter said, adding that the lender had already settled some claims three years ago.

In late 2013, Deutsche Bank agreed to pay $1.9 billion to settle claims that it defrauded U.S. government-controlled Fannie Mae and Freddie Mac, America's biggest providers of housing finance, into buying $14.2 billion in mortgage-backed securities before the 2008 financial crisis.

A $14 billion fine, or even half that sum, would still rank among one of the largest paid by banks to U.S. authorities in recent years. In 2013, JPMorgan Chase & Co ( ) agreed to pay $13 billion to settle allegations by the U.S. authorities that it overstated the quality of mortgages it was selling to investors in the run-up to the 2008-2009 financial crisis. In 2014, Bank of America Corp. ( ) agreed to pay $16.7 billion in penalties to settle similar charges.

Deutsche Bank has not said what it has set aside in anticipation of a settlement over the sale and packaging of resident mortgage-backed securities before 2008. Its overall legal provisions stood at 5.5 billion euros at the end of the second quarter.

Deutsche was once one of Europe's most successful players on Wall Street. Like many of its peers, it has since faced a slew of lawsuits that often trace back to the boom years before the crash. Its litigation bill since 2012 has already hit more than 12 billion euros.

Claims filed by individuals, companies and regulators against Deutsche, outlined in the bank's 2015 annual report, relate to mis-selling of subprime loans and manipulation of foreign exchange rates or gold and silver prices. Other lawsuits are for the rigging of borrowing benchmarks Libor and Euribor, used to set the price of mortgages and derivatives.

In July, Chief Executive John Cryan said he hoped to close the four largest remaining litigation cases this year.

These are the mortgages and FX cases, an investigation into suspicious equities trades in Russia and allegations of money laundering. </s> The Government has announced that it will offload a £2.6 billion stake in Royal Bank of Scotland, a move that will see the taxpayer's stake in the lender reduced from 70.1% to 62.4%.

UK Government Investments, which manages the state's stake in the lender, said it will sell approximately 7.7%, or 925 million shares, to institutional investors.

It is the first time shares in RBS have been offloaded since 2015.

"UK Government Investments today advised the Chancellor it would be appropriate to conduct the second sale of the Government's shareholding in the Royal Bank of Scotland.

"The Chancellor agreed with that advice and has authorised the process to begin," the Treasury said in a statement.

RBS recently agreed a 4.9 billion US dollar (£3.6 billion) settlement with US regulators, which removed a major hurdle to the bank's return to private hands.

The Government hopes to sell £15 billion worth of shares by 2023, about two-thirds of its stake.

But it is facing a near-£26.2 billion loss on its holding, with the lender's shares languishing well below the average 502p share price paid during the crisis era bailout, at around 280p.

The Government bought its stake in the bank for £45 billion in 2008 as part of a bailout at the height of the financial crisis.

Only last week, RBS's outgoing finance chief Ewen Stevenson said the recent slump in European stocks - sparked in part by jitters over the rise of Eurosceptic parties in Italy - might be a cause for pause for the Government.

Earlier this year, RBS reported a bottom-line profit for the first time in a decade.
The Royal Bank of Scotland announces that it will pay US$1.1 billion to resolve some of its mortgage claims in the United States.