$1.1 billion agreement

Royal Bank reaches part-settlement on US claims

RBS hqThe Royal Bank of Scotland has agreed to pay $1.1 billion (£846m) to settle one of the legal actions against it in the US over the mis-selling scandal.

The final settlement with the National Credit Union Administration Board resolves one of two outstanding civil lawsuits.

The settlements, involving its subsidiary RBS Securities Inc, relate to the two residential mortgage-backed securities (RMBS) cases (asserting claims on behalf of US Central Federal Credit Union and Western Corporate Federal Credit Union), most recently disclosed in RBS’s half year results.

The bank said the sum agreed is substantially covered by existing provisions as of 30 June 2016 and will have no material impact on the RBS Group’s key capital ratio. 

Other RMBS-related civil claims are still being considered, including those of the Federal Housing Finance Agency.

As previously stated, RMBS litigation and investigations may require additional provisions.

The agreement comes as Deutsche Bank challenges a potential $14 billion fine demanded by the US Department of Justice.

The German bank was expecting a payment of about $2.4bn, according to sources. One analyst said the German government is unlikely to offer any support but a lower payment is likely to be agreed.

RBS will publish its Q3 results on 28 October.

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