Royal Bank of Scotland expects to pay $4.9 billion to settle U.S. Justice Department charges that the bank sold bad mortgage-backed securities ahead of the 2008-2009 financial crisis, the bank announced Thursday.
RBS said in a news release the civil settlement "in principle" would conclude the Justice Department investigation into the issuance and underwriting of U.S. residential mortgage-backed securities from 2005 to 2007.
The office of Andrew Lelling, the U.S. attorney for Massachusetts, which led the investigation, confirmed the settlement on its Twitter account late Wednesday. "Further details remain to be negotiated, however, before a formal agreement can be reached," according to the tweet. Those details were not specified; efforts to reach the Justice Department for further information were unsuccessful.
"Today's announcement is a milestone moment for the bank," Ross McEwen, CEO of the bank, said in the release. "Reaching this settlement in principle with the U.S. Department of Justice will, when finalized, allow us to deal with this significant remaining legacy issue and is the price we have to pay for the global ambitions pursued by this bank before the crisis."
In March, RBS reached a $500 million to settle a similar RMBS-related investigation by then-New York Attorney General Eric Schneiderman. In that settlement, RBS admitted that it sold RMBS to investors that were backed by mortgage loan pools that suffered billions of dollars of collateral losses prior to the crisis.