RBS Settles Mortgage Securities Lawsuit for $5.5 Billion


The Royal Bank of Scotland Group (RBS) has reached a settlement with the Federal Housing Finance Agency (FHFA), the conservator of Fannie Mae and Freddie Mac, to resolve claims by the FHFA in relation to RBS’ issuance and underwriting of approximately $32 billion of residential mortgage-backed securities (RMBS) in the US.

Under the settlement, RBS will pay the FHFA $5.5 billion, of which $754 million will be reimbursed to RBS under indemnification agreements with third parties.

“Today’s announcement is an important step forward in resolving one of the most significant legacy matters facing RBS,” said RBS CEO Ross McEwan.

“This settlement is a stark reminder of what happened to this bank before the financial crisis, and the heavy price paid for its pursuit of global ambitions.”

The FHFA filed its lawsuit alleging violations of federal and state securities laws in connection with private-label RMBS trusts purchased by Fannie Mae and Freddie Mac between 2005 and 2007, the agency notes.

Under the terms of the agreement, RBS will pay approximately $4.525 billion to Freddie Mac and approximately $975 million to Fannie Mae.

RBS notes that as part of the settlement, the FHFA’s outstanding litigation against RBS will be withdrawn.

The settlement agreement can be accessed here.

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