The Royal Bank of Scotland or RBS Group is set to pay $125 million to settle the mortgage bond claims against it.
Xavier Becerra, California’s Attorney General, stated that the payment was to settle the claims regarding the group’s alleged misrepresentations. These were said to be made when RBS sold mortgage-backed securities to two large state pension funds.
Becerra announced the settlement on Friday. This was the latest effort made by RBS which is aimed to resolve the claims that stemmed from its sale of mortgage-backed securities, which were at the center of the financial crisis of 2008.
According to Becerra’s office, the securities typically had thousands of mortgage loans of varying quality. The buyer then relied on the guarantee that the mortgages went through careful screening and are not too risky.
Probes found that RBS failed in accurately disclosing the true traits of many of the thousands of mortgages underlying the securities to their investors, this also from Becerra’s office.
The investigation was also able to determine that the misrepresentations led to millions of dollars of losses, still from Becerra’s office. The losses were acquired by the California Public Employees’ Retirement System and the California State Teachers’ Retirement System.
“RBS decided to mislead California’s pension funds in order to line its own pockets – plain and simple,” said Becerra in a statement.
RBS Chief Executive Ross McEwan said in a statement on Saturday that the bank was content in reaching the settlement.
“We have been very clear that putting our remaining legacy issues behind us is a key part of our strategy,” McEwan said.
RBS Refreshes Board of Directors
Lena Wilson, former head of the Scottish development agency, was appointed as new addition to the bank’s board of directors. This action was in hopes of increasing diversity in the genders of their directors.
Wilson is seated as a non-executive replacement to Randy Crombie who will step down on January 01.
A new law will force all companies above a certain size to disclose their gender diversity for the first time as well as the difference of payment the male staffs receive from the female. This law pushed British banks to increase the number of women in their top ranks.
Wilson’s appointment means that RBS will have four women out of the 14 board members. Also, the move is made as it braces itself for the multibillion-pound fine that it will be paying for settlement.
RBS is a bank that still has more than 70 percent owned by taxpayers.
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