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TH E M R EP O RT | 63 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T SECONDARY MARKET THE LATEST LOCAL EDITION THE LATEST RBS Settles with NCUA MANY CREDIT UNION-RELATED CASES ARE STILL PENDING. VIRGINIA // The Royal Bank of Scotland Group PLC (RBS) reached a final settlement with the National Credit Union Administration Board (NCUA), headquartered in Alexandria, Va., to resolve two outstanding civil lawsuits for $1.1 billion due to toxic mortgage-backed securities sold to credit unions that subse - quently failed. According to their press state- ment, NCUA was the first federal financial institution's regulator to recover losses from investments in these securities on behalf of failed financial institutions. Net proceeds from recoveries are used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund. "NCUA is pleased with today's settlement, and fully intends to stay the course in fulfilling its statu - tory responsibilities to protect the credit union system and to pursue recoveries against financial firms that we maintain contributed to the corporate crisis," said NCUA Board Chairman Rick Metsger. RBS reports that these settle - ments, involving its subsidiary RBS Securities Inc., relate to the two residential mortgage-backed securities (RMBS) cases (assert - ing claims on behalf of U.S. Central Federal Credit Union and Western Corporate Federal Credit Union), most recently disclosed in RBS's 2016 Interim Results Announcement. The settlement amount is substantially covered by existing provisions as of June 30, 2016, and will have no mate - rial impact on the RBS Group's CET1 ratio. The settlement covers claims asserted in 2011 by the NCUA Board as liquidating agent for Western Corporate Federal Credit Union, and U.S. Central Federal Credit Union in federal district courts in California and Kansas, respectively. In connection with the settlement, NCUA will dismiss its pending suits against RBS. The statement from NCUA notes that RBS does not admit fault as part of the agreement. RBS continues to litigate various other RMBS-related civil claims identified in its disclosure, including those of the Federal Housing Finance Agency, and to respond to investigations by the civil and criminal divisions of the U.S. Department of Justice and various other members of the RMBS Working Group of the Financial Fraud Enforcement Task Force (including several state attorneys general). As previously stated, RMBS litigation and inves - tigations may require additional provisions in future periods that in aggregate could be materially in excess of the provisions exist - ing as of June 30, 2016. NCUA still has litigation pend- ing against other financial institu- tions, including Credit Suisse and UBS Securities, alleging they sold faulty mortgage-backed securi- ties to corporate credit unions. NCUA also has pending litiga- tion against various residential mortgage-backed securities trust- ees and LIBOR banks related to corporate credit union losses. LOCAL EDITION SECONDARY MARKET "NCUA is pleased with today's settlement and fully intends to stay the course in fulfilling its statutory responsibilities to protect the credit union system and to pursue recoveries against financial firms that we maintain contributed to the corporate crisis." —Rick Metsger, NCUA Board Chairman