RBS agrees £3.65bn settlement over mis-sold mortgages

Taxpayers still have a 73 percent stake in the bank.

The Royal Bank of Scotland (RBS) (LON:RBS) have reached an agreement in the U.S over its role in mis-sold mortgages in the run up to the financial crisis.

RBS agreed the £3.65 billion ($4.75 billion) settlement with the US Federal Housing Finance Agency, and is expected to negotiate a similar deal with the Department of Justice later on this year.

The bank’s chief executive Ross McEwan, said: “Today’s announcement is an important step forward in resolving one of the most significant legacy matters facing RBS.

“This settlement is a stark reminder of what happened to this bank before the financial crisis, and the heavy price paid for its pursuit of global ambitions.”

The tax-payer still own 72 percent of RBS, after the government led bail-out during the height of the financial crisis.

Earlier this year chancellor Philip Hammond indicated that the government may be prepared to sell its stake in RBS at a loss, given the fact that shares in the bank are worth about half of what the government paid.

Back in April, the troubled bank reported its first annual profits since 2015, posting profits of £259 million for the first quarter of 2017.

The bank has lost money every year since the £45 billion government bailout back in 2008, as legal costs and one-off settlements continue to weigh heavy.

However, the latest set of encouraging results were driven by an extensive £2 billion turnaround plan, in which the bank announced that it would cut around 180 jobs in the UK in a bid to drive down costs.

The bank has thus far achieved 37 percent of its cost-saving initative as it looks to continue to boost profitability.

Last month RBS announced that it had also reached a settlement with investors over a legal claim dating back to 2008 over a cash call.

This follows a series of postponements of a court date over the issue, as the bank scrambled to reach a settlement externally.