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RBS agrees Govt deal to resume dividends

Royal Bank of Scotland has agreed a deal with the Treasury to remove a barrier to dividend payments, paving the way for the lender to resume payouts once its finances improve.

The Financial Times reports that as part of the bank’s bailout in 2008, the Government acquired a dividend access share, which means the Treasury can take an enhanced dividend before payouts are made to ordinary shareholders.

RBS has been in talks with the Government to end the DAS since last year. Last month, it delayed its annual shareholder meeting to give it time to finalise the buyout agreement.

The bank has now agreed with the Treasury to buy out the DAS for £1.5bn. It will pay £320m upfront, and the remaining £1.2bn will be paid in flexible instalments.

RBS has also secured an extension until 2016 to launch Williams & Glyn’s, the business formed from the 316 branches it disposed of as a condition of its £45bn bailout.

RBS chief executive Ross McEwan says the DAS agreement is “a vote of confidence in the progress we have made in rebuilding RBS and in our plan for the bank’s future”.

Chancellor George Osborne says it 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”.

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