RBS faces $200 mln suit over troubled assets sale

* Fund said had exclusive right to buy assets, policies

* Fund wanted to buy policies that Ambac later bought

* RBS declines to comment on litigation

By Jonathan Stempel

NEW YORK, March 3 (Reuters) - Royal Bank of Scotland Group Plc (RBS.L) has been sued by a fund accusing the British bank of breaching an agreement to give it an exclusive right to buy troubled mortgage assets and related insurance policies.

The lawsuit could seek $200 million or more depending on market conditions, according to the complaint.

A fund set up by BroadStreet Group LLC filed the lawsuit in New York state supreme court in Manhattan on Wednesday. Broad Street is a New York-based investor in structured and other credits, including distressed mortgage-backed debt and collateralized debt obligations.

RBS has been selling assets after tens of billions of pounds of writedowns that prompted the British government in 2008 to take a majority stake.

The lawsuit by BCP Voyager Master Fund SPC Ltd said that RBS gave it an exclusive right to pay $202 million for a pool of assets known as Cairn II and take over related insurance policies issued by Ambac Financial Group Inc ABK.N.

RBS used the offer as a basis for direct talks with Ambac, resulting in a December 2009 agreement under which the bond insurer took back the insurance policies that the Cayman Islands-based fund wanted to buy, the complaint said.

"RBS circumvented the fund, and used the fund's offer to purchase the CDOs, the underlying assets and the insurance policies to solicit offers for those assets and others from Ambac as part of an overall transaction," the lawsuit said. "The fund has been injured financially."

RBS' policy is not to discuss pending litigation, spokesman Michael Geller said. A lawyer for the plaintiff did not immediately return a call seeking comment.

The BCP fund wants at least $34 million of damages representing the "liquidation value" of the Cairn II assets plus the difference between what it wanted to pay for the insurance policies and what Ambac wanted to pay, according to the complaint.

It said damages could exceed $150 million "in value over the payment term of the Cairn II assets." The fund is also seeking at least $50 million in punitive damages.

The case is BCP Voyager Master Fund SPC Ltd v. Royal Bank of Scotland Plc et al, New York State Supreme Court, New York County, No. 600535/2010. (Reporting by Jonathan Stempel. Editing by Robert MacMillan)