Royal Bank of Scotland has revealed a £1 billion exposure to failed investment bank Lehman Brothers.
In a court hearing on Wednesday, a lawyer for the bank disclosed the gross exposure to Lehman as part of bankruptcy proceedings, estimating it at between $1.5 billion and $1.8 billion (£0.83 billion and £1.0 billion).
According to the lawyer, Martin Bienenstock, the claims relate to an unsecured guarantee and are related to trading loses with Lehman subsidiaries.
Unsecured claims are often the last to be paid in US bankruptcy proceedings, but it is understood RBS's net charge is likely to be significantly less than this figure.
RBS has a strong capital ratio of around 6.3 per cent following its £12 billion rights issue earlier this year, giving the bank a strong balance sheet.
The bank is among many others who have been stung by the failure of Lehman Brothers and the US government rescue of insurer AIG.
Several insurers, including Aviva, Axa, Friends Provident and Swiss Re have all disclosed their exposure to the investment bank.
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