Royal Bank of Scotland CEO Ross McEwan said in a Bloomberg TV interview that RBS’s chances of reaching a settlement this year with the US Department of Justice over its mis-selling of toxic mortgage-backed securities are “diminishing”.

McEwan said the UK Government would “struggle” to sell down its shares in RBS before a US settlement.

The CEO said earlier this year he expected to reach a settlement this year — an important step in allowing the bank to return to full-year profitability in 2018.

Analysts have estimated the bank could pay up to $12 billion to settle the case.

McEwan told Bloomberg TV “there are diminishing chances” the bank will settle with the US Department of Justice in 2017 “but this is something that we do want to resolve.”

The CEO said: “We are in a very strong capital position.

“I think there is a lot of distraction in the Department of Justice with other issues in the United States.

“I’m not too sure where we sit in the priority list.”

The UK Government plans to reduce its 71% stake by about two-thirds over the next five years by selling £15 billion of shares.

“The government is pleased with the progress we are making within the bank,” said McEwan.

“I think they will struggle to sell the stock before the settlement.

“No one knows how big the fine will be, or when it will come.”