LONDON-- Royal Bank of Scotland Group PLC on Wednesday received
approval to pay GBP1.5 billion ($2.50 billion) to the U.K.
government to clear the way for it to eventually start paying
dividends to its shareholders.
Following its GBP45.5 taxpayer bailout, the British government
imposed a requirement that the RBS needed to pay a special dividend
to the U.K. Treasury before it can start paying any dividends to
ordinary shareholders. RBS said Wednesday that it had struck a deal
with both the U.K. Treasury and the European Commission.
The EC said Wednesday that the bank's restructuring plan
complied with EU state aid rules and the so-called dividend blocker
therefore could be lifted.
RBS proposed to pay a first installment of GBP320 million toward
extricating itself from the dividend blocker. The U.K. government
accepted that proposal; the agreement has to be ratified by
shareholders at this year's annual general meeting in June.
The decision remains largely symbolic for the bank. It is
unclear when RBS will actually recommence dividend payments. RBS
has racked up around GBP46 billion in losses since 2008 and
analysts don't see the bank handing payouts to shareholders for
several years.
"This is another important step on the road to a more resilient
banking system and in dealing with the problems of the past to get
taxpayer's money back," said U.K. Chancellor of the Exchequer
George Osborne.
RBS Chief Executive Ross McEwan described the agreement as "a
vote of confidence in the progress we have made in rebuilding
RBS."
After the 2008 bailout, the European Commission ruled that RBS
would have to shed 316 branches to meet EU competition rules that
were triggered by the bank's taxpayer bailout.
On Wednesday, the EC agreed to give RBS more time to sell those
branches by the end of 2017.
Write to Max Colchester at max.colchester@wsj.com
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