RBS in £845m payout over mis-sold US mortgage bonds

Bank settles credit union claims arising from 2008 global financial crisis but further payouts expected

The Royal Bank of Scotland is to pay £845 million 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 huge 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 on Tuesday that the group was working to resolve outstanding claims this year and into next, but warned it could create “substantial additional conduct provisions and noise”.

Banking experts believe the DoJ settlement could total around £9bn.

Its shares have been under pressure after the DoJ hit German rival Deutsche Bank with a £10.8bn penalty for mis-selling mortgage-backed securities.

RBS, which is still 73% owned by the Government, reiterated in the latest settlement announcement that ongoing lawsuits might force it to put more cash aside.

Shares in RBS closed up 2.35 at 176.95 following trading yesterday.

Picture: AP. RBS chief executive Ross McEwan said the group was working to resolve outstanding claims.