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Under the terms of the agreement announced on Wednesday, R.B.S. would pay $4.52 billion to Freddie Mac and about $975 million to Fannie Mae, the Federal Housing Finance Agency said in a news release.

"It is never a great experience for a CEO to be writing such a large cheque.but unfortunately that is the price we are paying to get this organization into a much better shape", RBS Chief Executive Ross McEwan told reporters.

The system-wide failure of complex securities derived from residential mortgages caused a cascading wave of bankruptcies and crises that sparked a global recession, leading to tens of millions of job losses around the world. An incremental charge of US$196 million (£151 million) will be recorded in the RBS Q2 2017 results which will be published on 4 August 2017.

That amount does not include a separate case by the Federal Housing Finance Agency involving securities issued by Nomura, for which R.B.S. said it meant to pursue indemnification.

RBS said following this agreement, unresolved RMBS litigation matters involve the issuance of less than $1bn of RMBS issued primarily from 2005 to 2007.

The settlement relates to approximately USD32.0 billion in mortgage-backed securities which were issued by RBS before the 2008 crisis.

He called the settlement an "important step forward" in resolving one of the bank's biggest legacy problems.

The boss of RBS said the fine was a "stark" reminder of what happened to the bank before the financial crisis. Accern also gave media headlines about the financial services provider an impact score of 12 out of 100, indicating that recent press coverage is very unlikely to have an effect on the company's share price in the immediate future.

In September 2016, it agreed to a $1.1 billion settlement with the U.S. National Credit Union Administration over sales to two corporate credit unions and a deal with the Department of Justice is expected later this year.

The expected U.S. settlements have weighed heavily on the bank amid fears over the size of the deals, with other banks having forked out mammoth sums.

UK Treasury chief Philip Hammond said earlier this year that the government is likely to lose billions of pounds when it sells of its stake at the bank.


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