ROYAL BANK of Scotland (RBS) is set to receive a $100m (£64m) payout from Goldman Sachs as part of the US bank’s settlement with the Securities and Exchange Commission (SEC) over fraud allegations.
The UK bank, which is led by chief executive Stephen Hester, is thought to have been the largest victim of the alleged sub-prime mortgage fraud, which was orchestrated by Goldman and involved hedge fund Paulson & Co.
RBS, which would not comment on the payment, lost £545m in investments on Goldman’s sub-prime mortgage portfolio named Abacus, which is at the heart of the fraud allegations. The bank’s involvement came after it acquired ABN Amro, which had insured a portion of the Abacus trade in 2007.
The bank is not the only recipient of payments from Goldman, $300m will go to the US Treasury.
While $250m will be returned to investors who bought into the subprime mortgage packages and were subsequently harmed by Goldman’s actions.
This includes Germany’s IKB bank which will get $150m.