‘Healthy’ RBS to hand out £3.5bn to patient investors

RBS shareholders are in line for an “extraordinary” payday this week when departing chief executive Ross Mcewan underlines its progress with a £1.1bn “bonanza”.

Ian Gordon, a banking analyst at Investec, said he expects to see a “dividend and buyback bonanza” announced alongside the bank’s half-year results that could mean investors receive a total of £3.5bn this year.

Mr Gordon forecasts a 9p dividend for the first half, a yield of 7.5pc “which would make RBS the biggest dividend payer in the UK banking sector”.

He added: “In comparison, high-dividend stocks Lloyds and HSBC yield 5.9pc and 6.2pc respectively.”

John Cronin, a UK banks analyst at Goodbody, said that RBS was “wellpositioned” to reward investors. The bank, which is still 62pc owned by the taxpayer, paid out its first dividend in a decade last year, on the eve of the 10-year anniversary of its bailout.

At the time it said it was keen to ramp up the payout after settling with the US Department of Justice over the mis-selling of toxic mortgage products.

It paid a $4.9bn (£4bn) fine, lower than expected.

“It’s been a long journey but RBS has been nursed back to health,” said RBS shareholder Alasdair Mckinnon, a fund manager at Scottish Investment Trust.

“We view it as an ugly duckling where, although there is still work to be done, the future potential remains underappreciated. RBS’S capital ratio is among the best in the sector and this should underpin a dividend that could make investors sit up and take notice.”

The bank is searching for a successor to Mr Mcewan, with internal candidate Alison Rose pegged as the City’s favourite.

RBS’S banking rivals Lloyds, Barclays and Standard Chartered also report results this week.

Shares in RBS have slipped 8pc this year to 228p, valuing the bank at £28bn.