The Royal Bank of Scotland has already paid out billions to settle one investigation into its alleged sale of toxic mortgages before the global financial meltdown in 2008. Now, it’s paying billions more in a bid to draw a line under the crisis.
The British bank has reached an agreement “in principle” with the US Department of Justice to end the department’s investigation into allegations it sold risky loans worth billions between 2005 and 2007, it said in a statement on Thursday.
Under the proposed settlement, RBS will pay a penalty of $4.9 billion. The deal is yet to be finalized, and will be subject to the bank and the DOJ entering into a legally-binding agreement.
The settlement marks a “milestone moment” for the bank, CEO Ross McEwan said in a statement.
“Reaching this settlement in principle with the US Department of Justice will, when finalized, 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,” he said.
RBS agreed to pay $5.5 billion last year to settle a separate investigation by the US Federal Housing Finance Agency. The bank said around $3.5 billion of the DOJ settlement would be covered by existing provisions, with the rest accounted for by an “incremental charge” in the second quarter of 2018.
The British government owns more than 70% of RBS, the legacy of a huge taxpayer bailout of the bank in 2008.
