ROYAL Bank of Scotland has been added to ­investment bank UBS's "least preferred" list of European banks due to fears it could face further hits from legal cases over the way it sold mortgage securities ahead of the credit crunch.

However, the move had little impact of RBS's share price which finished the day up 4.7p or 1.488% at 320.6p.

Last month, part-nationalised RBS paid $154 million (£95.5m) to settle charges with US regulators that it mis-sold $2.2bn of sub-prime residential mortgage-backed securities in 2007.

But the outgoing ­chairman of UK Financial Investments, which manages the taxpayer's 81% stake in RBS, said last month that more fines are expected.

Analysts at UBS are concerned that the proposed stock market listing of its US bank Citizens to raise capital will be to the disadvantage of RBS investors.

UBS analyst John-Paul Crutchley wrote in a note for clients: "Although we expect the actual costs to take some time to reach gestation, RBS has a relatively high (versus European peers) exposure to US mortgage litigation risk.

"Indeed, one of the reasons behind the expected initial IPO of the US regional bank, Citizens, at the end of next year and a full disposal by the end of 2016 is, we believe, to provide a means of generating the capital needed to accommodate potential litigation costs.

"This raises the risk of meaningful dilution in time and in the light of this and given the restructuring still underway at RBS, we move the stock to our least preferred list."

RBS has also paid £390m in fines to British and US regulators for its role in the Libor scandal and could be hit again as European authorities investigate the rigging of the Euribor benchmark borrowing rate.

Further legal action could hinder the attempt of new chief executive Ross McEwan to overhaul RBS and break with its past.

RBS declined to comment.

Meanwhile a study by an economics think tank concluded the UK's ­largest banks, including RBS, are effectively subsidised by £37.7bn a year as investors still expect the Government to bail them out if they get into trouble and so give them cheap funding.

The New Economics ­Foundation's head of finance and business Tony Greenham said: "The size of these subsidies remains ­staggering and suggests reforms have not gone far enough to tackle the ­problems in ­British banking. UK ­taxpayers are still on the hook for the big banks."