RBS agrees $1 billion payout over 2008 fundraising case

* $1 bln settlement is with 3 of 5 investor groups

* Bank seeks settlement with remaining groups

* Shares (Berlin: DI6.BE - news) rise more than 2 percent (Recasts, adds details, CEO quote)

By Andrew MacAskill and Kirstin Ridley

LONDON, Dec (Shanghai: 600875.SS - news) 5 (Reuters) - Royal Bank of Scotland (LSE: RBS.L - news) has reached a settlement with the majority of shareholder groups over allegations it misled them during a fundraising at the height of the financial crisis, but still has to strike a deal with thousands of smaller retail investors.

The state-controlled British bank said on Monday it had agreed a deal with three of the five investor groups involved in the lawsuit to pay out 800 million pounds ($1 billion) to be split across all five of the groups.

The split settlement adds a fresh dimension to an unprecedented English lawsuit that already stands out for its size and complexity, the number of separate claimant groups, and the focus on a section of the Financial Services Markets Act that has not been litigated on before.

RBS is now trying to reach an agreement with the other two groups in order to avoid the case coming to trial in March 2017.

The investors, represented by litigators Quinn Emanuel, Stewarts Law and Mishcon de Reya, had accused RBS of failing to give them a proper picture of its finances during a fundraising in 2008.

They lost most of their money when than bank nearly collapsed a few months later and had to be rescued by the British government with a bailout that ended up costing taxpayers more than 45 billion pounds.

Monday's deal includes a settlement with heavyweight institutions that bought about 10 percent of the 2008 share issue: Standard Life (LSE: SL.L - news) , Legal & General (LSE: LGEN.L - news) , Aviva (Other OTC: AIVAF - news) and Prudential (SES: K6S.SI - news) and the Universities Superannuation Scheme (USS).

RBS is currently attempting to settle a range of fines and lawsuits related to its alleged misconduct before and during the financial crisis, which have hindered its plans to return to profit and private ownership.

Last week, the bank was the biggest failure in the Bank of England's annual stress test of lenders, partly because of a mounting legal bill for misconduct that analysts and lawyers had previously estimated could cost the bank up to $27 billion. .

RBS Chief Executive Ross McEwan welcomed the settlement with some investors as another sign the bank is a drawing a line under its troubled past.

"We are pleased to have reached this agreement and hope that it will be accepted by the remaining claimant group(s)," he said.

RBS shares were up 2.1 percent to 197.5 pence at 0925 GMT.

The deal moves the bank closer to avoiding a lengthy and potentially embarrassing trial that could force its disgraced former executives take to the stand to discuss the darkest period in the bank's almost three-century history.

($1 = 0.7857 pounds) (Additional reporting by Sophie Sassard; Editing by Jane Merriman and Mark Potter)