THE US Securities and Exchange Commission is investigating Royal Bank of Scotland (RBS) over its exposure to American sub-prime mortgages.

The probe was launched in March, and covers the bank’s interests in securities backed by sub-prime home loans, as well as residential mortgages written by its US subsidiaries.

RBS is cooperating with the investigation – one of dozens launched into the mortgage industry by American regulators since the crisis began to emerge last year.

Details of the investigation are buried in the prospectus for the bank’s imminent £12 billion rights issue, which will be put to a vote at a shareholder meeting this week.

The probe is in addition to an earlier inquiry by the New York State attorney-general – relating to the bank’s Greenwich Capital subsidiary – which came to light earlier this year.

The documents reveal that RBS subsidiaries have received requests for information from “various US governmental agencies and self-regulatory organisations” in relation to the sub-prime mortgage crisis.

The documents add: “In particular, during March 2008 RBS was advised by the SEC that it had commenced a nonpublic, formal investigation relating to RBS’s US sub-prime securities exposure and US residential mortgage exposures. RBS and its subsidiaries are cooperating with these various requests for information and investigations.”

Wall Street sources have suggested that at least 40 separate probes have been launched by the SEC into issues stemming from the sub-prime crisis, ranging from insider trading to accounting practices.

A spokesman for RBS declined to comment on the matter beyond what was said in the prospectus.

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