You are here
RBS lays out plan to resume dividends a decade after bailout
[LONDON] Royal Bank of Scotland Group investors have had a long wait, but a decade after the financial crisis the government-owned bank finally gave concrete plans to resume dividends.
The Edinburgh-based lender will pay a two pence a share interim dividend subject to a final agreement with US regulators, it said in its quarterly earnings on Friday. RBS's path to the payouts was largely cleared after it reached a settlement in May with the Department of Justice (DOJ) over the historic sale of toxic mortgage bonds, reducing uncertainty over its financial strength.
The intention to pay a dividend to RBS investors "is a huge event for the bank" chief financial officer Ewen Stevenson said in an interview with Bloomberg Television. "We do need to sign the final agreement with the DOJ."
Resuming dividends will make it easier for the British government to attract long-term investors when offloading its majority stake in RBS acquired during the financial crisis. The UK sold £2.5 billion (S$4.5 billion) of the shares primarily to hedge funds in June, trimming its holding to about 62 per cent.
The bank said operating profit plummeted to £613 million in the second quarter from £1.24 billion a year earlier. RBS booked a charge of £782 million for conduct and litigation costs, which included money put aside for a settlement with the DOJ.
The bank said it intends to pay 40 per cent of attributable profit to shareholders in the medium term.