Royal Bank of Scotland Group plc (LON:RBS) has settled allegations that it sold toxic mortgage-backed securities, but more claims are set to follow.
RBS has agreed the £845.2mln deal to resolve two lawsuits filed in federal courts in California and Kansas by the US National Credit Union Administration (NCUA) as the liquidating agent for two failed credit unions.
The British bank has not admitted fault under the terms of the settlement, which follows a deal in 2015 in which RBS agreed to pay US$129.6mln to sort out a NCUA lawsuit in New York.
RBS continues to face probes by the US Justice Department and a multi-billion lawsuit by the US Federal Housing Finance Agency, acting on behalf of state owned mortgage companies Fannie Mae and Freddie Mac.
The mostly taxpayer-owned bank has said it was working towards resolving various mortgage bond claims during the rest of this year and next year.
It said the latest settlement was substantially covered by existing provisions which totalled £3.8bn at the end of June.
But chief executive Ross McEwan has said resolution of outstanding claims would result in “substantial additional conduct provisions and noise”.
Shares in Royal Bank of Scotland Group plc (LON:RBS) rose 1.2% to 176.4p on the news.
But they fell in London on Tuesday as investors fretted that the total bill could be as much as £9bn.
Sentiment has been further undermined by fears that Deutsche Bank AG (NYSE:DB) could struggle to settle similar toxic mortgage security-related claims of up to US$14bn.
Shares in Deutsche on Tuesday threatened to drop below €10 for the first time in about 30 years as investors worried they may have to bail out the bank, although on Wednesday the stock rallied 3.4%.
Deutsche is challenging the US Justice Department over the matter, although German chancellor Angela Merkel has reportedly ruled out helping it, particularly ahead of Germany’s national polls next year.
But Deutsche insisted it had not approached Berlin for assistance and had no plans for a capital increase.