RBS investors face a long wait for a dividend after eighth year of loss
RBS shareholders face a long wait for their first dividend since 2008 after it announced its eighth consecutive year of losses.
The bank – which was rescued with £46bn from taxpayers during the financial crisis – posted a loss of £2bn for 2015.
The lender has now racked up losses of £50bn since the crash. Shares slumped 17.4p, or 7.1pc, to close at 226.6p on the news.
The woes at RBS stand in stark contrast to Lloyds, which saw its share price soar on Thursday after paying out a surprise £2bn dividend.
RBS investors have been warned they will not get a dividend until its Williams & Glyn business has been sold. The sale is a requirement of RBS’s bailout, but has proved more complicated and costly than first expected.
Bank chiefs now say this will be completed by the end of 2017. Around £630m has been spent on the disposal this year and analysts warned it would take more time and money to complete.
Ian Gordon, of Investec Bank, said: ‘I’ve no reason to believe that’s not deliverable, but it’s remarkable how complicated and expensive it is to separate two banks.’
Even if the sale goes through on time, investors will still have to wait for the end of lawsuits relating to the bank’s behaviour in the run-up to the crash. American regulators are expected to lumber RBS with a multibillion dollar fine for selling toxic bundles of mortgage debt.
RBS set aside £3.6bn for dealing with fines and lawsuits last year. This included £157m for mis-selling packaged bank accounts and £600m for PPI claims, plus £2.1bn for the US mortgage fines.
Another £2.9bn went on restruc- turing. Together, these two bills more than wiped out its profits.
Hargreaves Lansdown analyst Laith Khalaf said: ‘There’s a really strong UK retail bank in RBS trying to get out, but its results are still dominated by the litigation and restructuring costs that stem from its former days at the vanguard of casino capitalism.’
Experts now believe shareholders will not see a dividend until late 2017 at the earliest, with no return to solid earnings until 2019.
The only exception will be the Treasury. It is set to get £1.2bn later this year as part of an agreement that RBS would pay back some bailout money to taxpayers before rewarding other shareholders.
Chairman Sir Howard Davies said it was ‘impossible to say’ if taxpayers would get all their money back when the Government finally decides to sell its remaining 73pc stake in the bank.
The Government paid 500p a share in 2008 and will need a huge recovery in RBS’s current price to break even.