The taxpayer-backed lender said the penalty with the US Department of Justice (DoJ) was a “milestone” for the group, ending a long-running probe and paving the way for the Government to relaunch plans to sell its 72 per cent stake in the bank.

RBS said 3.46 billion US dollars (£2.5 billion) of the proposed civil settlement will be covered by existing provisions and the bank will take a 1.44 billion US dollar (£1.1 billion) hit in its second quarter results.

But the settlement still needs to be finalised, with further details set to be negotiated.

The bank has agreed a 4.9 billion US dollar (Â£3.6 billion) settlement with US regulators. Picture: Philip Toscano/PA Wire

RBS chief executive Ross McEwan said: “Today’s announcement is a milestone moment for the bank.

“Reaching this settlement in principle with the US Department of Justice will, when finalised, allow us to deal with this significant remaining legacy issue and is the price we have to pay for the global ambitions pursued by this bank before the crisis.”

The latest settlement follows a 5.5 billion US dollars (£4.1 billion) US penalty agreed with the Federal Housing Finance Agency last July.

The settlements have weighed heavily on the bank amid fears over the size of the deals, with other banks having forked out mammoth sums.

RBS is one of the last to settle with US regulators, following rival Barclays, which agreed a two billion US dollar (£1.5 billion) agreement in March with the DoJ and Deutsche Bank, which struck a 7.2 billion US dollars (£5.3 billion) settlement at the end of 2016.

It has also been a major hurdle to the bank’s return to private hands, with the Government having said the US mis-selling claims need to be resolved before it can start to sell its shares in the lender.

RBS agrees Â£3.6bn US settlement in '˜milestone' deal