RBS Agrees To Pay $4.9 Bln Penalty To Settle U.S. Mortgage Bond Probe

(RTTNews) - Royal Bank of Scotland Group Plc. (RBS, RBS.L) agreed to pay a $4.9 billion penalty to settle a U.S. Justice Department investigation about the bank's issuance of residential mortgage-backed securities.

RBS said that $3.46 billion of the amount will be covered by existing provisions, with an incremental charge of $1.44 billion in the second quarter.

RBS Chief Executive officer Ross McEwan said the agreement in principle with the US Justice Department was "a milestone".

The probe into RBS's sale of financial products from 2005 to 2007 has been a financial cloud hanging over the bank.

McEwan said that the settlement will "allow us to deal with this significant remaining legacy issue and is the price we have to pay for the global ambitions pursued by this bank before the crisis."

He said that "removing the uncertainty" would mean that RBS, bailed out by the UK taxpayer in 2008, would make the bank much stronger.