Royal Bank of Scotland has been told it could face a $13bn (£8.3bn) bill over its behaviour before the 2008 crisis, causing shares to fall 2.1 per cent in mid-morning trading.
The 79 per cent taxpayer-owned bank is involved in a long running case in a Connecticut court over how it packaged mortgage bonds and sold them to government lenders, overseen by the Federal Housing Finance Agency (FHFA).
The claim comes as chancellor George Osborne prepares to sell government shares in RBS at a loss to the Treasury. The bank received £46bn from the government in 2008 and is yet to recover, posting a loss of £3.5bn in 2014.
The $13bn figure is the first time the FHFA has given a value to its case, outstripping previous estimates. A settlement is expected to be “substantial” and could come this year, RBS chief executive Ross McEwan has said.
It is more than double the profit RBS is expected to make this year and in excess of its provisions. The case began in 2011, but no trial date has been set.
The sum was reached using a previous $806m mortgage securities ruling, from another US court, against RBS and Nomura in May, Bloomberg reports.
Using the judgement as a “rough reference point that extrapolates to a judgement in the Connecticut action of nearly $13bn,” the FHFA wrote in a document linked to its New York case.
In June 2014, RBS agreed to pay $99.5m in a separate FHFA suit which accused the bank of selling more than $2bn worth of faulty mortgage-backed securities to Fannie Mae and Freddie Mac between 2005 and 2007.
Read more: RBS pays $99.5m to settle claims
The bank has also paid out £400m from misselling payment protection insurance, £430m in US fines related to foreign exchange rigging and £444m in conduct and litigation charges in the fourth quarter of 2014.