Milestone for RBS as it pays first dividend since its near-collapse

ROYAL Bank of Scotland has paid out its first dividend since the financial crisis, on the eve of the 10th anniversary of its bail-out by taxpayers.

The lender paid 2p per share to shareholders, equating to a £240m windfall. The Treasury – which still owns 62pc of the bank – will receive around £150m of the payment. Ross Mcewan, the RBS chief executive, hailed the modest interim payout as an “important milestone” for the bank, which was brought to its knees by reckless expansion and global market turmoil a decade ago.

The bank is keen to ramp up the dividend after finally settling with the US Department of Justice earlier this year over the mis-selling of toxic mortgage products in the run-up to the crisis. It paid a $4.9bn (£3.7bn) fine, which was lower than expected.

This left RBS with about £4bn of excess capital it wants to start returning to investors.

However, it first needs to pass Bank of England stress tests before the end of the year to get the all-clear from regulators. Mr Mcewan has also warned a chaotic Brexit could delay the bank’s plans to lift the dividend.

The 2008 bail-out of RBS cost the Treasury £45bn. Despite yesterday’s payout and a series of share sales by the Government, taxpayers are all but certain to make a loss on the rescue, with shares languishing at around 249p, well down on the 502p level at the bail-out. The last share sale by the Government in June of a 7.7pc chunk of the lender crystallised a £2bn-plus loss.

Both the Government and RBS have argued it is unrealistic for taxpayers to expect to make a profit on the rescue.

Sir Howard Davies, RBS chairman, defended the bail-out last month, saying the move was justified “to save the UK financial system from collapse” and should not be viewed “as a financial investment”.

Mr Mcewan added: “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.

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