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Sancho Panza

Rbs Takes Major Step Towards Paying Dividend

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Telegraph 9/4/14

'Royal Bank of Scotland has taken a major step towards resuming its dividend after agreeing with the Treasury to "retire" a special share that blocked payouts to shareholders. ‎The taxpayer-backed lender, which is 81pc owned by the state, said the European Commission had signed off a deal allowing it to amend a state-aid agreement put in place at the time of its bail-out in 2008 that meant shareholders could not be paid a dividend.

‎George Osborne, the Chancellor, said he was "pleased" at the agreement to get rid of the so-called Dividend Access Share (DAS).

"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 taxpayers' money back," said Mr Osborne.

Ross McEwan, RBS chief executive, said: "Today's agreement is a vote of confidence in the progress we have made in rebuilding RBS and in our plan for the bank's future. We now need to get on with building an RBS that can earn the trust of our customers and help change UK banking for the better."

Negotiations over the cancellation of the DAS began last year, with the share originally valued at £1.5bn, though City analysts now estimate it to be worth less than half that amount.

Its retirement is largely symbolic at present given RBS remains loss-making and at least a year away from returning to profit.

In February, RBS confirmed that losses since its rescue had consumed all of the £46bn pumped into the bank six years ago to stave off its collapse.

RBS's taxpayer-backed rival Lloyds Banking Group has also yet to resume dividend payments, but said it could make a small payout to shareholders based on its performance in the second half of the year.

Paying dividends is seen in the City as crucial to the full rehabilitation of RBS and Lloyds as normal banks.

The deal on the dividend will likely be seen as an endorsement by the Treasury of Mr McEwan's strategy for the bank.'

Take away ZIRP,HTB1,HTB2,FLS and what have you got?

Not much more than a rotting carcass where the maggots are eating well.

If they couldn't run some profits in this environment,then it doesn't bode well for future profitability when the UK property market shrinks back to 3 times average salary-never mind the undershoot.

With a bit of luck-for tax payers-George will manage to offload this rotting hulk before the next round of capital is needed.

Edited by Sancho Panza

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