RBS coughs up first divi in a decade

The UK government has pocketed £150 million as Royal Bank of Scotland coughed up the first dividend since its £45 billion bailout a decade ago.

Chief executive Ross McEwan - 'a small return after their many years of patience'. Picture: Ian Rutherford
Chief executive Ross McEwan - 'a small return after their many years of patience'. Picture: Ian Rutherford

The bank said it had paid out a total of £240m to around 190,000 ordinary shareholders including UK Government Investments, which manages the government’s 62 per cent stake in the lender.

RBS announced the 2p per share interim dividend in August after reaching a $4.9 billion (£3.7bn) settlement with US authorities over claims that it mis-sold mortgages in the run-up to the financial crisis.

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The shareholder payout comes almost ten years to the day since the bank received the first tranche of a government rescue package at the height of the banking crash on 13 October 2008.

Chief executive Ross McEwan said: “I’m pleased to be able to pay a dividend to our shareholders; a small return after their many years of patience and a testament to the hard work of everyone at this bank.

“This is another important milestone in our turnaround, almost ten years to the day that RBS was rescued by the British taxpayer.

“We have created a smaller, safer bank that is generating more sustainable profits.

“Our capital position is above our target and we are also looking to return any excess capital as soon as possible to shareholders.”

But while the dividend was welcomed by the Treasury, the government is unlikely to ever recoup the cash it stumped out for RBS during the bailout.

The government earlier this year sold a 7.7 per cent stake in RBS at a £2.1bn loss to the UK taxpayer.

The sale of around 925 million shares brought the public holding in RBS down from approximately 70.1 per cent to 62.4 per cent, resulting in proceeds of just £2.5bn at 271p per share.

The government paid an average of 502p per share on its bailout of RBS during the financial crisis.

RBS chairman Howard Davies said last month that taxpayers are “unlikely to recoup [the] investment in full,” given the bank’s languishing share price.

“The focus on survival over a decade has had a cost,” he said.