Royal Bank of Scotland Group (LON:RBS) is considering restarting dividends on a scale that would make it one of Britain’s most generous payers to shareholders, The Times has reported. The move could potentially accelerate the government’s sale of its holding in the bailed-out lender.
RBS’ share price has gained ground in London this morning, having added 0.50 percent to 291.56p as of 08:40 BST, largely in line with the broader market, with the benchmark FTSE 100 index currently standing 0.56 percent higher at 7,822.31 points. The group’s shares have added just under 11 percent to their value over the past year, as compared with a near five-percent rise in the Footsie.
RBS mulls over dividends
One senior source close to RBS told The Times that the bank was now ‘quite similar’ to Lloyds and talk that it could match its rival’s dividend distributions was ‘reasonable speculation’. The part government-owned lender was banned from paying dividends about 10 years ago as a condition of its taxpayer-funded bailout and therefore must win approval from the Prudential Regulation Authority to restore its payout to shareholders. The newspaper noted that some in the City were hoping that it will be able to make a pledge alongside its half-year results in the summer for a payout at the end of the year.
The news comes after the lender recently agreed a $4.9-billion preliminary mortgage settlement with the US Department of Justice, which is set to pave the way both for the UK government to start offloading its holding in the lender, as well as for the FTSE 100 group to reinstate its dividend.
Jefferies flags 6p per share for 2018
The Times reports that Jefferies analyst Joseph Dickerson believes that RBS will be able to pay a final dividend of 6p for the current year, with the payout rising to 16p by 2020, marking a five-percent yield and a similar level of payout to that of Lloyds.