The RBS dividend is back

For the first time since £45bn bailout in 2008

rOYAL Bank of scotland unveiled its first dividend payment to shareholders since its £45bn taxpayer bailout in the financial crisis.

the 2p per share payout – worth £90m – marks a major milestone on the bank’s road to recovery after it was forced to accept a rescue deal from the Government in 2008.

the dividend came as the bank revealed it had made a profit for the fifth out of six quarters, despite having to pay a £3.5bn penalty to the Us Department of Justice over mortgage mis-selling.

Chief executive ross McEwan said: ‘We still have a lot more to do to achieve our ambition of being the best bank for customers in the UK and the republic of ireland.

‘however, with our major legacy issues largely behind us, we are able to fully focus on closing this gap.’

rBs used to be one of the biggest UK-listed cash-cows for investors before the financial crisis, regularly paying dividends.

McEwan said this sum would not be a one-time wonder, and shareholders could expect bigger payouts from next year including share buy-backs and special dividends.

this will be welcome for the Government which still owns 62pc of rBs. When the treasury last sold shares in the bank, in June, it booked a £2.1bn loss from its 2008 bailout price.

But the Government’s stake will be worth more than before as shares in rBs climbed 3pc, or 7.7p, to 257.8p yesterday.

this valued the remainder of the chunk held by the Government at around £19.4bn.

helal Miah, an analyst at the share Centre, said: ‘the reinstatement of the dividend will not only give existing shareholders some confidence, but also the large number of fund managers who could not invest in rBs previously due to the lack of any income.’

With renewed fund manager interest, the Government should be able to re-privatise the bank more easily.

Despite the £888m profit booked for the first half of this year, slightly down from last year’s £939m due to the Us fine, more rBs and Natwest branch closures are on the cards.

the bank had already said it will shut 162 branches this year, axing almost 800 jobs. it has now added that before the year end it will review the rest of the 138 branches it was planning to sell under the Williams & Glyn name, with a view to pulling the shutters down on more.

the Williams & Glyn brand had originally been resurrected by rBs as the EU demanded it sell some of its business to compensate for the 2008 bailout which counted as ‘state aid’.

rBs set aside 307 branches to sell as the new Williams & Glynn, but the deal was later cancelled as rBs said Brexit would cause the firm to fail.

McEwan said the smaller network would put the bank on a more ‘stable’ footing for the years ahead. his own future at the bank is under scrutiny, since he has previously implied that getting rBs to a level where it could pay dividends was one of the last goals he wished to achieve as chief executive.