Bulletin: Royal Bank of Scotland Ratings Unaffected By Announced Settlement With U.S. Federal Housing Finance Agency

LONDON (S&P Global Ratings) July 12, 2017--S&P Global Ratings said today that its ratings and outlook on The Royal Bank of Scotland PLC (RBS; BBB+/Stable/A-2), The Royal Bank of Scotland Group PLC (RBSG; BBB-/Stable/A-3), and its subsidiaries are unaffected by today's announcement that it has reached a settlement with the U.S. Federal Housing Finance Agency (FHFA) over its issuance and underwriting of residential mortgage-backed securities (RMBS) in the U.S. before the financial crisis. Under the terms of the settlement, RBS has agreed to pay the FHFA $5.5 billion. Net of a $754 million indemnity provided by third parties, we understand that RBS will pay $4.75 billion. Moreover, we note that RBSG's on-balance-sheet provisions of $8.3 billion as of end-March 2017--of

...LONDON (S&P Global Ratings) July 12, 2017--S&P Global Ratings said today that its ratings and outlook on The Royal Bank of Scotland PLC (RBS; ###+/Stable/A-2), The Royal Bank of Scotland Group PLC (RBSG; ###-/Stable/A-3), and its subsidiaries are unaffected by today's announcement that it has reached a settlement with the U.S. Federal Housing Finance Agency (FHFA) over its issuance and underwriting of residential mortgage-backed securities (RMBS) in the U.S. before the financial crisis. Under the terms of the settlement, RBS has agreed to pay the FHFA $5.5 billion. Net of a $754 million indemnity provided by third parties, we understand that RBS will pay $4.75 billion. Moreover, we note that RBSG's on-balance-sheet provisions of $8.3 billion as of end-March 2017--of which $4.55 billion related to the settlement with FHFA--will cover most of this cost. In today's announcement, RBS mentioned that it will record a related charge of $196 million in its second-quarter results. We understand...

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