The Royal Bank of Scotland announced Friday the intention to pay its first dividend in a decade, once its settlement with the U.S. Department of Justice (DOJ) is finalized.
While well below the pre-crisis payout, the ability to offer a dividend to shareholders is a milestone for the group, RBS Chief Financial Officer Ewen Stevenson said on Friday. This initial interim dividend will stand at 2 pence per share.
“It’s obviously a massive event for the organization — last time we paid a dividend was 2007. I think it’s a really positive sign of how much progress the bank has made over the last few years,” he told CNBC’s Nancy Hungerford.
The U.K. lender has been mired in a years-long legal saga with the DOJ over its selling of toxic mortgages in the U.S. in the run-up to the 2008 financial crisis. The lengthy settlement agreement process has prevented the bank from providing dividends to its shareholders. In May, RBS agreed to pay a £3.6 billion ($4.9 billion) penalty to the DOJ to end the investigation.
“We do have to get the DOJ agreement signed relating to RBS, but once that’s signed we’ve declared today a 2 (pence) dividend subject to that,” the CFO said. “And I do think from here we’ll build payouts very nicely, we do expect payouts to increase significantly going into 2019 and 2020.”
RBS also reported a loss for the first half of the year after paying out £1 billion ($1.3 billion) of the DOJ fine. Attributable profit for the British lender came to £888 million, down 5 percent from £939 million in the first half of 2017.