Royal Bank of Scotland in £1.2bn ‘milestone’ to resume share payouts

Royal Bank of Scotland Group and the UK government have agreed to scrap the state’s rights to preferential dividends, paving the way for the bank to return capital to shareholders as early as next year.

The banking group — which owns Ulster Bank — paid £1.2bn (€1.53bn) to the UK Treasury to retire Britain’s so-called dividend access share, the Edinburgh-based lender said yesterday.

The payment will reduce the bank’s tangible net asset value per share by about 10 pence, in the first quarter, and would have lowered its common-equity Tier 1 capital ratio, a measure of financial strength, by about 50 basis points, at the end of 2015.