United States regulators have told Royal Bank of Scotland Group it could pay as much as $13 billion (€11.7 billion) if it loses a lawsuit over its handling of mortgage securities.

The US federal housing finance agency, suing in a Connecticut court on behalf of government-owned lenders Fannie Mae and Freddie Mac, made the estimate in a court filing in a related case. RBS is seeking to have the case dismissed, arguing the suit filed in 2011 came too late.

A spokesman for the bank declined to comment.

A settlement is expected to be “substantial” and could come this year, RBS chief executive Ross McEwan has said.

The prospect of a large US fine comes as British chancellor George Osborne prepares to sell shares in RBS as early as September at a loss to the UK treasury. – (Reuters)