The Royal Bank of Scotland has confirmed it will repay to the treasury, the last of the £163bn in emergency loans it received from the US and UK governments. This prompted RBS’s CEO Stephen Hester to say, the bank was now on the road to recovery.
A further £36.6bn will be paid back to the Bank of England and $84.6 to the US Federal Reserve. This announcement also came with its first quarter results. Where RBS reported a pre-tax loss of £1.4bn, compared with a loss of £116m in the same period last year.
However the loan repayment news ,had a great effect on company shares, which rose more than 1.3 % immediately after the opening bell in London to change hands at 24.87 pence. The stock has risen more than 22 % so far but remains well short of the 50.2 pence per share mark in which the UK government injected its £45.5bn stake.
The bank will also begin paying shareholder dividends now that an EU restriction expired last month. According to a statement around £350m will be paid to preferred shareholders, but Hester said it will be at least a year before the bank is able to pay dividends on its ordinary shares.
Much of the loss came from changes in the valuation of RBS's debt. It made an operating profit of £1.2bn.RBS has also set aside an extra £125m to cover claims for PPI mis-selling. It means the bank will have set aside a total of £1.2bn for payment protection insurance compensation.