RBS subsidiary Ulster Bank lost its high court battle with Dublin-based businessman David Agar, who claimed he had been mis-sold €87m (£68m) of interest rate hedging products linked to a €47m property loan.
The bank is reported to have written off swaps and loans totalling €30m as part of the settlement, in addition to paying Agar's €1m legal fees.
The size of the settlement is expected to lead more businesses to pursue compensation claims through the courts, potentially opening the floodgates to billions of pounds in claims against the UK's major banks.
Gerry Hoare, founder of Deal Bureau, said: "I think there are several [print] companies who might have been subject to this issue, a few of which will have failed over the last couple of years.
"That will reduce the issue and some of the larger companies who are trading may not want to pursue the bank, for fear of disrupting a relationship. For me it is the corporate equivalent of the personal loan protection insurance mis-selling."
Barclays, HSBC, Lloyds and RBS signed up to an FSA "redress" scheme in June to compensate firms that had been mis-sold hedging products.
Santander, Co-op, Allied Irish, Bank of Ireland, Clydesdale and Yorkshire banks, and Northern Bank all joined the scheme earlier this month.
RBS has previously stated that "less than 1%" of its one million SME customers currently have interest rate hedging facilities, although this would still suggest that thousands of firms could be affected by the latest scandal to hit the financial industry.
To date, Barclays is the only bank to have made provision for compensation claims after it set aside £450m last week in relation to swap mis-selling claims.
According to the FSA, the redress scheme covers "non-sophisticated" customers who were sold interest rate hedging products, including swaps, caps, collars and structured collars, after December 2001.
FSA definition of interest rate hedging products
The purpose of an interest rate hedging product is to enable the customer to manage fluctuations in interest rates, for example, by providing greater certainty over future loan repayments. These products are typically separate to a loan.
Swaps: which enable customers to ‘fix’ their interest rate
Caps: which place a limit on any interest rate rises
Collars: which enable customers to limit interest rate fluctuations to within a simple range
Structured collars: which enable customers to limit interest rate fluctuations to within a specified range, but involves arrangements where, if the reference interest rate falls below the bottom of the range, the interest rate payable by the customer may increase above the bottom of the range
Non-sophisticated customers are classified as businesses that only meet one or fewer of the following definitions: a turnover of more than £6.5m; more than 50 staff; a balance sheet total of more than £3.26m.
