Royal Bank of Scotland Group PLC has agreed to pay a $4.9 billion settlement with the U.S. Department of Justice to resolve claims of misleading investors in the underwriting and issuing of residential mortgage-backed securities during the financial crisis.
The settlement's proposed size was first announced in May.
According to the Justice Department, between 2005 and 2008, RBS routinely made misrepresentations to investors about significant risks, including failing to disclose systemic problems with originators' loan underwriting and providing investors with inaccurate loan data.
RBS routinely found that borrowers for the loans in its residential mortgage-backed securities did not have the ability to repay their mortgages, and that appraisals for the properties guaranteeing the loans had materially inflated the property values, the DOJ said.
The penalty is the largest imposed by the Justice Department for alleged financial crisis-era misconduct at a single entity under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the department said.
RBS disputes the allegations and does not admit them, the department said.