Royal Bank of Scotland is to pay 1.1 billion US dollars (£845 million) to a US regulator to settle two claims over mis-sold mortgage bonds in the run-up to the financial crisis.
The taxpayer-backed lender reached the agreement with the National Credit Union Administration Board, which regulates credit unions in America.
RBS sold the mortgage securities to the US Central Federal Credit Union and Western Corporate Federal Credit Union, but the bonds later proved toxic and failed after the US housing bubble burst in 2008.
The bank, which does not admit fault under the deal, said the settlement is "substantially" covered by the £3.8 billion already put aside to cover upcoming litigation.
But RBS still faces potentially mammoth settlements over mis-selling of mortgage securities turned sour in the US, with claims still outstanding with the Federal Housing Finance Agency and US Department of Justice (DoJ).
RBS boss Ross McEwan said at a conference in London on Tuesday that the group was working to resolve outstanding claims this year and into 2017, but warned it could create "substantial additional conduct provisions and noise".
Banking experts believe the DoJ settlement could total around £9 billion.
Its shares have been under pressure after the DoJ hit German rival Deutsche Bank with a 14 billion US dollar (£10.8 billion) penalty for mis-selling mortgage-backed securities.
Fears over the impact on Deutsche Bank have sent its shares tumbling close to 30-year lows.
RBS, which is still 73% owned by the Government, reiterated in the latest settlement announcement that ongoing lawsuits might force it to put more cash aside.