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>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>The settlement with RBS brings the U.S. regulator's recoveries against various banks to $4.3 billion in lawsuits over their sale of mortgage-backed securities before the 2008 financial crisis.

NCUA Board Chairman Rick Metsger said the regulator was pleased with the settlement and plans to continue "to pursue recoveries against financial firms that we maintain contributed to the corporate crisis."

The settlement 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 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 U.S. Justice Department or various state attorneys general.

The bank also continues to face 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.

Replying to a request for comment, an RBS spokesman on Tuesday pointed to comments that RBS CEO Ross McEwan made at a conference in London earlier in the day, 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.</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>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>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 wants to increase Ulster Bank’s mortgage market share, improve its capital efficiency, and reduce its costs, group chief executive Ross McEwan told a Bank of America Merrill Lynch conference on Tuesday.

Mr McEwan said Gerry Mallon’s focus as Ulster Bank’s new chief executive was on “driving a strong and profitable bank recognizing the need to reduce the cost base”.

“We will get cost in excess capital out of this business and focus on ... and growing this business safely,” he said. “We want to increase our mortgage market penetration and improve capital efficiency. We’re seeing good new business volumes growth, and costs are coming down. They’re down 2 per cent on like-for-like basis compared to last year.”

Ulster Bank had an 18 per cent share of new mortgages in the first quarter of this year.

Mr McEwan said the UK’s recent decision to exit the EU meant that there “are likely to be unique opportunities for major UK and Irish banks”.

He said the Ulster Bank brand had been “refreshed” and its new brand positioning was “much more reflective of the bank we are becoming”.

“Banking has traditionally been an area that people have been slow to embrace digital, historically preferring the security and personal elements of face-to-face banking.

“Today, we are at a turning point in this tradition. Increasingly, our customers will further interact with us digitally. Over 4 million of our personal customers actively bank through their phones, and that’s growing at about 20 per cent per year.”

Mr McEwan also spoke about Williams & Glyn, a separate entity that it was trying to set up for an IPO in line with an agreement with the European Commission. The business is run by former Ulster Bank CEO Jim Brown.

“We recently took a decision to stand down the current plan of action of creating a cloned bank for IPO, given the lower interest rate environment,” he said. “With rates much lower for much longer it was clear that the business would not be able to grow its balance sheet to the extent necessary to deliver returns above cost of capital within the next five years.”

Mr McEwan said RBS looked at a trade sale at the end of last year and was now considering “some other alternatives” for Williams & Glyn.</s>Royal Bank of Scotland has said it will complete the ring-fencing of its retail banking operations by the end of 2018.

The lender, which is still 73 per cent owned by the Government, is required to separate its investment banking operations from its high street arm by 2019.

“In order to be compliant with its requirements, we need to undertake a significant reorganisation of our current legal entity structure and business model,” the bank said Royal Bank of Scotland has said it will complete the ring-fencing of its retail banking operations by the end of 2018.

The group said NatWest will become its main customer-facing brand in England and Wales and Western Europe, while in Scotland RBS will be its core brand.

Its investment banking arm will become known as NatWest Markets.

Chief executive Ross McEwan said: “Our proposed future structure under the ring-fencing legislation and our brand strategy are key elements of the bank we are becoming.

“The future ring-fenced structure of the bank is not only designed to be in compliance with the new regulatory requirements and objectives but will better reflect who we are as a bank and what we stand for: a bank that is focused on its customers.”

Earlier this week, RBS revealed that it is to pay 1.1 billion US dollars (£845 million) to a US regulator to settle two claims over mis-sold mortgage bonds in the run-up to the financial crisis.

RBS also faces further potentially large 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).
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.