Royal Bank of Scotland Group PLC (RBS) will pay US$1.1 billion to settle National Credit Union Administration (NCUA) claims that it sold faulty mortgage-backed securities to US credit unions.
The agreement with RBS is among the largest in a series of settlements in which banks have paid hundreds of millions of US dollars over accusations stemming from sales that contributed to the collapse of corporate credit unions after the 2008 financial crisis.
The accord, reached on Tuesday, closes 2011 lawsuits filed in California and Kansas on behalf of two corporate credit unions, the NCUA said in a statement, and it follows an earlier RBS agreement to pay US$129.6 million to resolve similar lawsuits over two other credit unions.
“NCUA is pleased with today’s settlement and fully intends to stay the course in fulfilling its statutory responsibilities to protect the credit union system and to pursue recoveries against financial firms that we maintain contributed to the corporate crisis,” NCUA chairman Rick Metsger said in a statement.
The NCUA, which regulates the credit union industry, said it has recovered more than US$4 billion in related settlements.
RBS has not admitted fault in this or the earlier settlement. The lender on Tuesday said in a statement that the settlement cost was “substantially” covered by provisions it has made, and it will not have a material impact on the bank’s capital.
RBS still faces mortgage securities disputes involving the US Federal Housing Finance Agency and the US Department of Justice and might need to set aside more money, it said.
The payouts are directed to a fund meant to handle claims stemming from the failures of five institutions that served the rest of the credit union industry.
In other settlements late last year, the NCUA got US$325 million from Barclays PLC, US$225 million from Morgan Stanley and US$53 million from Wells Fargo and Co.
The agency is pursuing Credit Suisse Group AG and UBS Group AG with similar complaints, it said.
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