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Royal Bank (RBS) Nears Mortgage Bond Settlement with FHFA

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The Royal Bank of Scotland Group plc  is about to reach a settlement with the Federal Housing Finance Agency (FHFA) regarding the sale of mortgage-backed securities to Fannie Mae and Freddie Mac during the 2008 financial crisis, per a SkyNews report.

The deal is expected to cost $4.5 billion (£3.5 billion) to the bank. However, it would still be in talks of settlement with the U.S. Department of Justice and the cost is expected to be higher than that with FHFA.

Royal Bank recently was in headlines for reaching settlement with the shareholders on a lawsuit filed for misstating its financial condition back in Apr 2008. The settlement of around £1 billion made an impact on its financials.

In the last quarter, the bank reported profit for the first time since Sep 2015. This was possible due to its renewed initiatives. Also, it plans to get over with the pending legal cases by the end of this year. Though these settlements have hurt Royal Bank’s reputation to some extent, its efforts to enhance financial position is encouraging.

Royal Bank’s shares have gained 14.2% in the last six months, outperforming the 7.5% rally of Zacks categorized Banks - Foreign industry.

Currently, the bank carries a Zacks Rank #2 (Buy).

Some other stocks in the same space worth considering include Bank of N.T. Butterfield & Son LTD (NTB - Free Report) , KB Financial Group Inc. (KB - Free Report) and UBS Group AG (UBS - Free Report) .

Bank of N.T. Butterfield & Son and UBS Group carry a Zacks Rank #2, whereas KB Financial Group sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  Bottom of Form

Bank of N.T. Butterfield & Son’s earnings estimates were revised upward by 4.0% for the current year, in the past 60 days. Also, its share price jumped 16.9%, over the last six months.

UBS Group witnessed a 5% upward earnings estimate revision for the current year, in the past 60 days. Moreover, its shares gained 3.3% in the last six months.

KB Financial’s current-year earnings estimates were revised 13.5% upward, over the last 60 days. Further, its shares rallied 35.5%, in the last six months.

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