The Government has pocketed £150 million as Royal Bank of Scotland coughed up the first dividend since its £45 billion bailout a decade ago.
The bank on Friday paid out a total of £240 million to around 190,000 ordinary shareholders including UK Government Investments, which manages the Government’s 62% stake in the lender.
RBS announced the 2p per share interim dividend in August after reaching a 4.9 billion US dollar (£3.7 billion) settlement with US authorities over claims that it mis-sold mortgages in the run-up to the financial crisis.
The shareholder payout comes almost 10 years to the day since the bank received the first tranche of a Government rescue package at the height of the banking crash on October 13 2008.
Chief executive Ross McEwan said: “I’m pleased to be able to pay a dividend to our shareholders; a small return after their many years of patience and a testament to the hard work of everyone at this bank.
“This is another important milestone in our turnaround, almost 10 years to the day that RBS was rescued by the British taxpayer.
“We have created a smaller, safer bank that is generating more sustainable profits.
“Our capital position is above our target and we are also looking to return any excess capital as soon as possible to shareholders.”
But while the dividend was welcomed by the Treasury, the Government is unlikely to ever recoup the cash it stumped out for RBS during the bailout.
The Government earlier this year sold a 7.7% stake in RBS at a £2.1 billion loss to the UK taxpayer.
The sale of around 925 million shares brought the public holding in RBS down from approximately 70.1% to 62.4%, resulting in proceeds of just £2.5 billion at 271p per share.
The Government paid an average of 502p per share on its bailout of RBS during the financial crisis.
RBS chairman Howard Davies said last month that taxpayers are “unlikely to recoup [the] investment in full,” given the bank’s languishing share price.
“The focus on survival over a decade has had a cost,” he said.
Loan loss provisions, hits from acquisitions and costs linked to misconduct and litigation over the likes of mis-selling of payment protection insurance (PPI) and sub-prime mortgages in the US, have all dragged on RBS finances.
The lender is now exploring a share buyback programme that would speed up its privatisation by bringing the public holding to less than 50% by the end of the current parliament.
Commenting on the dividend payout, a Treasury spokesman said: “We welcome the dividend payment, which demonstrates the continued progress RBS has made in resolving its major legacy issues and achieving its first full year of profit since the crisis.
“All money recovered from our shareholding in RBS will be used to pay down the national debt.”