The Royal Bank of Scotland will pay $1.1 billion to the National Credit Union Administration in order to settle claims related to faulty mortgage-backed securities sold to U.S. credit unions, according to an article in Bloomberg by Jesse Hamilton.
The settlement is the latest, and among the largest, in a series of settlements that date back to the financial crisis, the article explained.
The article also noted that RBS hasn’t admitted fault in this or the earlier settlement. The lender said in a statement Tuesday that the settlement cost was “substantially” covered by provisions it’s made, and it won’t have a material impact on the bank’s capital.
“NAFCU and our members thank NCUA Board Chairman Rick Metsger and NCUA Board Member J. Mark McWatters for their continued leadership on this critical issue. We appreciate NCUA’s persistence in pursuing recoveries, which have now grown to $4.3 billion, on the sale of faulty securities that led to the downfall of five corporate credit unions,” said National Association of Federal Credit Unions President and CEO Dan Berger.
“NAFCU will continue to urge the agency to pursue its diligent legal recovery efforts and to be fully transparent in how and when the funds recovered will be refunded to credit unions,” Berger continued.
NAFCU noted in its statement that its recoveries in its suits over MBS will offset the total costs to credit unions of the corporate stabilization program.
At this time last year, RBS also had to pay $129.6 million to NCUA to resolve claims arising from losses related to purchases of residential mortgage-backed securities by Members United and Southwest corporate credit unions.
The NCUA alleged at the time that the firms made misrepresentations in connection with the underwriting and subsequent sales of MBS.