We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Royal Bank of Scotland Fined $4.9B for MBS Suit Settlement
Read MoreHide Full Article
The Royal Bank of Scotland Group plc , headquartered at Edinburgh, the U.K, will pay $4.9-billion (£3.62 billion) as settlement for the resolution of the U.S. Department of Justice probe, Reuters has reported. The bank had been charged for misguiding investors in sale of mortgage-backed securities (MBS) prior to the financial crisis.
The Probe
The investigating department, the U.S. Attorney's Office in Massachusetts, entered into an agreement in principle with Royal Bank of Scotland for resolving civil claims in May 2018. These claims were associated with MBS sold from 2005 to 2008. "Despite assurances by RBS to its investors, RBS’s deals were backed by mortgage loans with a high risk of default," Andrew E. Lelling, U.S. Attorney for the District of Massachusetts, noted in a statement.
Post the financial crisis of 2008, regulators, including the Justice Department, have ramped up efforts to penalize financial entities for wrongdoings and misrepresentation of facts while selling investment products.
Royal Bank of Scotland has been combating several litigation issues related to MBS. However, the aforementioned settlement includes only civil penalties and no criminal charges. "This settlement holds RBS accountable for serious misconduct that contributed to the financial crisis," mentioned Acting Associate Attorney General Jesse Panuccio, in a statement.
Per the source, though RBS did not admit any wrongdoing, it was content with the settlement.
Similar Cases
The bank, in recent months, has settled similar cases for being probed by the state attorneys general of California and New York, for $125 million and $500 million, respectively.
In July 2017, RBS agreed to settle a lawsuit by paying $5.5 billion that accused it of misrepresenting facts pertaining to MBS by the Federal Housing Finance Agency.
Previously, in September 2016, RBS had agreed to the resolution of claims over the MBS sold to credit unions by paying $1.1 billion. The announcement was made by the U.S. National Credit Union Administration.
The Justice Department had also entered similar settlements with other banks, including Citigroup (C - Free Report) , Deutsche Bank (DB - Free Report) and JPMorgan (JPM - Free Report) .
In Conclusion
We believe all these settlements indicate the bank’s efforts to get past the legal headwinds and concentrate on the improving operational efficiency. Moreover, the recent announcement related to resumption of paying dividends is expected to act as a tailwind.
In six months’ time, the company’s share price has declined 21.6% on the NYSE as compared with the 15.2% fall recorded by the industry.
Royal Bank of Scotland currently carries a Zacks Rank #4 (Sell).
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Royal Bank of Scotland Fined $4.9B for MBS Suit Settlement
The Royal Bank of Scotland Group plc , headquartered at Edinburgh, the U.K, will pay $4.9-billion (£3.62 billion) as settlement for the resolution of the U.S. Department of Justice probe, Reuters has reported. The bank had been charged for misguiding investors in sale of mortgage-backed securities (MBS) prior to the financial crisis.
The Probe
The investigating department, the U.S. Attorney's Office in Massachusetts, entered into an agreement in principle with Royal Bank of Scotland for resolving civil claims in May 2018. These claims were associated with MBS sold from 2005 to 2008. "Despite assurances by RBS to its investors, RBS’s deals were backed by mortgage loans with a high risk of default," Andrew E. Lelling, U.S. Attorney for the District of Massachusetts, noted in a statement.
Post the financial crisis of 2008, regulators, including the Justice Department, have ramped up efforts to penalize financial entities for wrongdoings and misrepresentation of facts while selling investment products.
Royal Bank of Scotland has been combating several litigation issues related to MBS. However, the aforementioned settlement includes only civil penalties and no criminal charges. "This settlement holds RBS accountable for serious misconduct that contributed to the financial crisis," mentioned Acting Associate Attorney General Jesse Panuccio, in a statement.
Per the source, though RBS did not admit any wrongdoing, it was content with the settlement.
Similar Cases
The bank, in recent months, has settled similar cases for being probed by the state attorneys general of California and New York, for $125 million and $500 million, respectively.
In July 2017, RBS agreed to settle a lawsuit by paying $5.5 billion that accused it of misrepresenting facts pertaining to MBS by the Federal Housing Finance Agency.
Previously, in September 2016, RBS had agreed to the resolution of claims over the MBS sold to credit unions by paying $1.1 billion. The announcement was made by the U.S. National Credit Union Administration.
The Justice Department had also entered similar settlements with other banks, including Citigroup (C - Free Report) , Deutsche Bank (DB - Free Report) and JPMorgan (JPM - Free Report) .
In Conclusion
We believe all these settlements indicate the bank’s efforts to get past the legal headwinds and concentrate on the improving operational efficiency. Moreover, the recent announcement related to resumption of paying dividends is expected to act as a tailwind.
In six months’ time, the company’s share price has declined 21.6% on the NYSE as compared with the 15.2% fall recorded by the industry.
Royal Bank of Scotland currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>