AIG and RBS to sue Goldman

AIG and the UK’s RBS are considering suing Goldman Sachs over losses incurred on insurance deals on mortgage-backed securities similar to the one that led to fraud charges against the US bank, the FT reports.

AIG's action is over losses of about $2bn. They follow Friday's decision by the Securities and Exchange Commission (SEC) to file civil fraud charges against Goldman.

AIG is reviewing deals to insure $6bn-worth of Goldman's collateralised debt obligations in the run-up to the crisis. It has yet to decide whether to take action. AIG and Goldman declined to comment.

RBS waits and sees

RBS, which lost $840m in an allegedly fraudulent investment created by Goldman Sachs, will await the outcome of US investigations before deciding whether to pursue its own legal action, the FT said

RBS will see if the SEC is successful in the civil suit against Goldman. RBS lost money on the deal through its ownership of ABN, the Dutch bank it bought at the height of the credit bubble in 2007. ABN had acted as a guarantor for ACA, the main counterparty in the deal.

ABN took a small fee in exchange for the promise that in the event ACA ran into big financial difficulties, ABN would make good any money ACA owed on the Goldman deal.

RBS shares rose more than 4% on Monday on hopes it might claw back some of its losses.

FSA steps in

The FSA confirmed that following preliminary investigations it has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to the SEC allegations. ??"The FSA will be liaising closely with the SEC in this review," the watchdog said.??