RBS to pay its first dividend since 2008 bailout

MILESTONE Mc Ewan

MILESTONE Mc Ewan

Profits at Britain's Royal Bank of Scotland nearly evaporated in the second quarter after a vast United States fine over its role in the notorious subprime crisis, the lender said Friday.

The interim dividend will be 2p per share, though the timing of the payout is subject to the finalisation of its USA settlement.

This will be paid out when it completes a $4.9 billion (£3.8 billion) settlement with the US Department of Justice over the sale of pre-crash financial products linked to risky mortgages.

The bank added further distributions are not likely to happen until 2019.

First-half operating profit fell 6.4% to £1.83bn and included a halving of second-quarter operating profit to £613m on-year.

The UK government sold a 7.7% stake in RBS in June, reducing its ownership of the bank it bailed out with a £45bn rescue package in 2008 to around 62.4% from 70.1%.

The bank's intention to pay its first dividend in a decade comes as it reported a first-half attributable profit of £888m - down 9% on same period past year.

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

Helal Miah, investment research analyst at The Share Centre, described the results as "very encouraging", showing "good signs of progress". However, they said this first payout since the financial crisis was subject to the timing of the penalty payment to the DoJ.

That compared with 680 million pounds in the same part of the previous year.

RBS shares rose 3% to 257.6p in early trading.

A cross-party group of MPs warned that banks were effectively "untouchable" after the Financial Conduct Authority concluded that it did not have the powers to tackle RBS over the scandal at its global restructuring group.

"The dividend hike for the time being means the income is still very modest and we therefore feel that it is a share for investors seeking capital growth and a longer term recovery in the share price for those willing to accept a medium level of risk".

The firm operates through UK Personal & Business Banking, Ulster Bank RoI, Commercial Banking, Private Banking, RBS International, NatWest Markets, Capital Resolution, Williams & Glyn, and Central Items & Other divisions. That's 12% higher than during the same period a year ago.

The dividend marks a milestone in RBS's rocky road to rehabilitation over the last decade.

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