Royal Bank of Scotland on Wednesday agreed to pay a US regulator $5.5 billion (4.8 billion euros) over its role in the subprime mortgage crisis more than a decade ago.
“The Royal Bank of Scotland… has reached a settlement with the Federal Housing Finance Agency,” a statement said, adding that under the deal, FHFA “litigation against RBS will be withdrawn”.
“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,” RBS chief executive Ross McEwan said in the statement.
Once the $5.5 billion is paid, RBS will be reimbursed $754 million “under indemnification agreements with third parties”.
The net cost to RBS of $4.75 billion is largely covered by money already set aside, said the bank which was rescued by the British government in the world’s largest bailout at the height of the financial crisis in 2008.
The system-wide failure of complex securities derived from residential mortgages caused a cascading wave of bankruptcies and crises that sparked a global recession, leading to tens of millions of job losses around the world.
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