9th Apr 2014 18:07
LONDON (Alliance News) - Royal Bank of Scotland Group PLC Wednesday said it has reached an agreement with the UK government over the future retirement of the dividend access share, in a move that marks an important step for the bailed out bank to one day resume paying dividends and return to private ownership.
Under the agreement, RBS will pay the Treasury an initial GBP320 million in 2014 in order to remove the dividend access share, a key part of the government's GBP25.5 billion capital injection in 2009. A further GBP1.18 billion payment will be required to retire the dividend access share, RBS said. It will be payable in one or more dividends.
"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," Ross McEwan, chief executive, said in a statement.
The move comes after RBS exited the asset-backed protection scheme it entered as part of the 2009 capital injection in October 2012, while the GBP8 billion contingent capital facility, agreed at the same time, was terminated in December 2013.
The 2008 financial crisis left RBS on the verge of collapse, and resulted in a GBP45.5 billion state bailout that was closely watched by European authorities.
As part of its state aid, RBS was also forced into divesting of certain assets, including the Williams & Glyn Project Rainbow bank branches. However, the bank was unable to divest of the business by the December 31 2013 deadline after Santander UK decided against going ahead with the purchase of the business.
In a statement, the European Commission said proposals by UK authorities to amend RBS's restructuring plan are in line with EU state aid rules, adding that the delay in divesting its Rainbow branches won't jeopardise the viability of the business.
"The Commission has agreed to extend the deadline for divesting Rainbow because the UK authorities and RBS have proven their commitment to create and divest Rainbow as a solid standalone bank," Joaquín Almunia, Commission Vice President in charge of competition policy, said in a statement.
RBS shares Wednesday closed at 309.80 pence, up 0.2%.
By Samuel Agini; [email protected]; @samuelagini
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