Bnakers likened mortgage trading at the bank to organised crime. Photo/123RF.
Bnakers likened mortgage trading at the bank to organised crime. Photo/123RF.
Royal Bank of Scotland faces fresh embarrassment after it emerged its bankers joked about destroying America's housing market before the financial crisis.
The Daily Mail reports that a top executive in the bank's US division revealed it had sold a bundle of "total f***ing garbage" sub-prime mortgages to investors but disguised the loans to "look ok".
Bankers also likened mortgage trading at RBS to "organised crime" and discussed 'fraud that was so rampant'.
The comments came to light in documents released as part of a £3.9billion settlement with the US Department of Justice after the bank was accused of misleading investors over sales of mortgage-backed investments between 2005 and 2008.
The Justice Department said the penalty is the largest ever imposed on a bank for misconduct leading up to the financial crisis.
The revelations marked another low point for RBS just a day after the bank was ranked the worst for customer service in Britain. Less than half of the taxpayer-backed bank's current account customers said that they would recommend it to a friend or relative.
Chief executive Ross McEwan faced a further backlash this week when he said the bank could start shifting tens of billions of pounds out of Britain because of Brexit, even though it only survived because of taxpayer support.
The documents released by the DoJ, from internal phone and email conversations, revealed the attitude among senior bankers at RBS before the crisis.
RBS bank has been left embarrassed by the revelations. Photo/123RF.
A senior banker said the sub-prime mortgages were a product of a broken industry with lenders 'raking in the money' and lower-ranking staff who 'don't give a s*** because they're not getting paid'.
One email sent to an RBS trader from a friend said: 'I'm sure your parents never imagined they'd raise a son who would destroy the housing market in the richest nation on the planet.'
The trader replied: "I take exception to the word 'destroy'. I am more comfortable with 'severely damage'."
Andrew E. Lelling, US Attorney for the District of Massachusetts, said: "Despite assurances by RBS to its investors, RBS's deals were backed by mortgage loans with a high risk of default."
McEwan said: "There is no place for the sort of unacceptable behaviour alleged by the DoJ at the bank we are building today."
The state-owned bank is still 62 per cent owned by taxpayers after the government was forced to fork out £45.5billion to bail it out at the height of the financial crisis.
Despite a number of share sales since, Britain is unlikely to ever recoup the investment.
A Treasury spokesman said this week: "The Government is not and should not be in the business of managing banks."
