RBS shells out $130m to settle toxic mortgage-backed securities case

Royal Bank of Scotland has paid $129.6 million (£84 million) to settle a long-standing legal action in the United States in which it was accused of selling toxic mortgage-backed securities to two failed credit unions.

The taxpayer-controlled bank said the payment to the National Credit Union Administration Board (NCUAB) was not an admission of liability, but it brings to an end a legal action launched in 2013.

The NCUAB has sued several banks on behalf of the now defunct Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union on the grounds that they should not have been sold mortgage-backed securities, and that they were partly responsible for their failures.

RBS sold the two credit unions about $300 million of such risky investments.

JP Morgan has so far paid the biggest settlement in a similar case, forking out $1.4 billion to the NCUAB.

Other banks to have settled include HSBC, Bank of America, Deutsche Bank and Citi.

RBS had no comment on the settlement, part of chief executive Ross McEwan’s drive to sort out legacy legal issues at the bank.