Nomura, RBS Face $806 Million Demand by U.S. Housing Agency

Nomura Holdings Inc. and Royal Bank of Scotland Group Plc should pay $806 million in damages to government-owned mortgage companies over misleading securities pitches, a federal housing agency told a judge.

The proposed payout was outlined in a court filing Friday by the Federal Housing Finance Agency, at the request of a New York judge who found the banks liable for “enormous” deception in the sale of mortgage-backed securities.

Nomura, based in Tokyo, and Edinburgh-based RBS agreed to pay in exchange for seven certificates involved in the case, the agency said in its filing, though they may still challenge the damages amount.

The certificates were valued in March at about $480 million, according to Elliott Z. Stein, a litigation analyst at Bloomberg Intelligence.

The banks were anticipating a steep demand for compensation after being excoriated this month by U.S. District Judge Denise Cote in a 361-page opinion following the first trial of claims that banks sold flawed securities to Fannie Mae and Freddie Mac.

In at least 184 of 672 sample loans that were reviewed, home values were inflated and appraisers didn’t believe the figures they provided were correct, Cote said.

Before that trial, FHFA had reached $17.9 billion in settlements with other banks, including Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc.

Jonathan Hodgkinson, a U.S.-based spokesman for Nomura, declined to comment on the matter until a judge issues a final damages amount. Nomura had said it would appeal the ruling.

RBS declined to comment on the FHFA request.

The case is Federal Housing Finance Agency v. Nomura Holding America Inc., 11-cv-06201, U.S. District Court, Southern District of New York, (Manhattan).