By Chandres (Own work) [CC BY-SA 3.0] via Wikimedia Commons
Royal Bank of Scotland (RBS) has agreed to a settlement amounting to $500m (£360m) with the state of New York over historical claims of mis-selling.
The announcement was made by Eric Schneiderman, the Attorney General of New York. It was made ahead of what is anticipated to be a much larger deal with the Department of Justice (DoJ) of the United States.
Last Friday, sources informed reporters that the state-backed lender was “within weeks” of agreeing on a multi-billion dollar amount with federal officials, in a settlement that would pave the way for the sale of the majority stake of the taxpayers to resume.
The penalties all relate to the sale of retail mortgage-backed securities (RMBS) ahead of the financial crisis in 2008.
Schneiderman said that RBS admitted to having sold RMBS that did not meet underwriting guidelines to investors, contrary to its representations, and had failed to comply with applicable laws and regulations.
He said that the said settlement involved a cash payment amounting to $100m to the state, plus $400m for consumer relief for the communities and homeowners.
The bank is desperate to place legacy conduct issues behind it even though delays helped RBS to report the bank’s first annual profit for a decade in February.
Last February, the bank warned that the financial performance of 2018 and the ability of the bank to resume payments of dividends for the first time since its bailout amounting to £45.5bn, would be affected by the unresolved case with the DoJ.
RBS has set aside approximately $3.5bn to cover the anticipated fine.
The bank was yet to release a comment on the New York settlement.