State attorney general says of agreement: ‘While the financial crisis may be behind us, New Yorkers are still feeling the effects’
Royal Bank of Scotland on Tuesday agreed to pay $500m to settle charges of using deceptive practices while marketing and selling mortgage-backed securities before the 2008 financial crisis.
Announcing the agreement, the New York attorney general, Eric Schneiderman, said: “While the financial crisis may be behind us, New Yorkers are still feeling the effects of the housing crash. Home values plummeted. Vacant homes consumed neighborhoods. And for many New Yorkers, affordable housing fell out of reach.
“Today’s settlement is another important step in our comprehensive effort to help New Yorkers rebuild their lives and communities.”
The news comes as the bank is expected to shortly reach a separate agreement with the US Department of Justice, which is expected to run into billions of dollars.
The New York agreement includes $100m in cash to the state and $400m in consumer relief for New York homeowners and communities.
RBS, part owned by the UK government, has set aside $4.4bn for claims relating to its activities in the run-up to the financial crisis. As part of the New York settlement the bank admitted to selling residential mortgage-backed securities that failed to comply with underwriting guidelines.
The bank moved back into profit for the first time in 10 years last month but its shares have been weighed down by concerns about the US fines.
“This is a symbolic moment for this bank and a clear indication of the progress we continue to make in putting the past behind us,” said its chief executive, Ross McEwan.