Royal Bank of Scotland (RBS) has agreed to pay $4.9bn to resolve charges by the US Justice Department (DOJ) of misleading investors on residential mortgage-backed securities (RMBS) in the run-up to the financial crisis.

The fine is said to be the largest-ever imposed on a single entity for wrongdoings in the period of the financial crunch.

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US attorney for the district of Massachusetts Andrew Lelling said: “This resolution – the largest of its kind – holds RBS accountable for defrauding the people and institutions that form the backbone of our investing community.

“Despite assurances by RBS to its investors, RBS’s deals were backed by mortgage loans with a high risk of default. Our settlement today makes clear that institutions like RBS cannot evade responsibility for the damage caused by their illicit conduct, and it serves as a reminder that the Justice Department, and this Office, will hold those who engage in fraudulent conduct accountable.”

According to DOJ, RBS misled investors in the underwriting and issuing of RMBS from 2005 and 2008 by concealing problems with originators’ loan underwriting, changing due diligence findings to keep high-risk loans from its RMBS, and offering inaccurate loan data to investors.

RBS used RMBS to shift the risk of faulty loans and tens of billions of dollars in losses to investors, DOJ said.

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The bank earned “hundreds of millions of dollars” through the scheme, DOJ said. However, the bank does not admit misconduct.

RBS CEO Ross McEwan said: “There is no place for the sort of unacceptable behaviour alleged by the DoJ at the bank we are building today.”