The Royal Bank of Scotland (RBS) has agreed to pay the National Credit Union Administration (NCUA) $1.1 billion to settle claims over the sale of allegedly “toxic” mortgage-backed securities to corporate credit unions that later failed, the administration announced last Tuesday. The settlement will resolve claims against RBS in federal actions in California and Kansas the NCUA board brought against multiple financial institutions in its role as liquidating agent for Western Corporate Federal Credit Union and U.S. Central Federal Credit Union.
According to NCUA, banks duped credit unions into purchasing the securities by downplaying investment risks and making misrepresentations in offering documents.
RBS does not admit any fault under the terms of the settlement agreement, NCUA said.
Last week’s settlement brings NCUA’s total recovery to $4.3 billion to date. Net proceeds will be used to pay claims against five failed corporate credit unions, NCUA said.