RBS to pay $5.5 bln to resolve major U.S. mortgage probe

LONDON xx (Reuters) - Royal Bank of Scotland will pay $5.5 billion to settle one of the two major U.S. investigations into allegations it mis-sold mortgage-backed bonds that it needs to resolve before the government can sell its shares in the bailed-out bank.

The Edinburgh-based bank lender on Wednesday said it agreed to settle the lawsuit with the U.S. Federal Housing Finance Agency (FHFA) that accuses it of mis-selling $32 billion of mortgage-backed securities before the global financial crisis.

Analysts had previously estimated RBS would have to pay between $3.5 to $5 billion to settle the case with the FHFA.

($1 = 0.7723 pounds)

(Reporting By Andrew MacAskill; editing by Simon Jessop)