RBS reports its first profit in a decade, after nearly £60 billion in losses

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Royal Bank of Scotland, majority owned by the UK government since the financial crisis, today reported its first annual profit since 2007. The Edinburgh-based lender was once the world’s biggest by assets, but has since been beset by fines and legal expenses. It has cut its headcount by more than half from its peak.

RBS said it made a net profit of £752 million ($1.05 billion) in 2017 (pdf), compared with a £7 billion loss the year before. Between 2008 and 2016, it recorded cumulative losses worth £59 billion.

Allegations of past misdeeds still hang over the bank. Investors await a settlement of charges by the US Department of Justice (DOJ) over RBS’s role selling subprime mortgage-backed securities. Analysts at Deutsche Bank think the cost could be between £3 billion and £7.5 billion, according to an October research note. RBS has also been criticized by UK officials (pdf) for its treatment of struggling smaller businesses.

“RBS continues to cooperate with the DOJ and with certain state attorneys general in their investigations of RMBS matters,” RBS said today, referring to residential mortgage-backed securities. “The duration, timing for resolution and outcome of these investigations and RMBS litigation matters remain uncertain, including in respect of whether settlements for all or any of such matters may be reached.”

RBS’s long slog to profitability demonstrates just how deeply the crisis damaged much of the global financial system. In the US, the government spent, invested, or loaned $626 billion to prop up everything from banks and insurer to automakers; $713 billion has been returned so far, according to ProPublica data. The UK took a £46 billion stake in RBS as the banking system teetered, but as of November the government said it was still sitting on a £26 billion loss (pdf) from the emergency investment.

A DOJ settlement could open the way for the UK government to fully offload its stake: According its budget documents (pdf), the government is seeking to sell about £15 billion in RBS shares by the end of 2023.