Challenger bank Shawbrook, chaired by Sir George Mathewson, has been valued at £725 million on its stock market debut, with the former Royal Bank of Scotland chief executive making nearly £3.6 million from the flotation.

Sir George, who was RBS’s chief executive and then chairman before leaving the bank in 2006, has sold shares worth nearly £900,000 as part of the initial public offering.

The 75 million ordinary shares the bank issued into the market were priced at the upper end of the range at 290p yesterday.

The bank had previously indicated it would float at between 255p and 305p.

Sir George’s remaining stake in the niche business lender after receiving shares valued at Shawbrook’s offer price is worth a further £2.7 million.

In conditional dealing, Shawbrook’s shares rose 16p, or 5.5 per cent, to 306p yesterday. Its shares will start trading on the main market next Wednesday.

The windfall for Sir George could be seen as controversial given that RBS is yet to make a profit since the financial crisis and is still 80 per cent government-owned.

But the IPO has also provided a big payday for Pollen Street Capital, RBS’s private equity business that was split out of the state-backed lender in 2013.

Pollen Street has netted nearly £106 million from selling 35.5 million shares, or 15 per cent, of the bank. It retains 59 per cent.

Shawbrook’s management collectively sold 3 per cent, including Stephen Johnson, a founder of the bank, who sold £3.7 million of shares, leaving him with an £11 million stake.

Shawbrook’s shares were priced at the high end of its 255p to 305p range, reflecting strong demand for the Essex-based bank.

The flotation will raise £90 million through the sale of 75 million shares, which Shawbrook will use to finance growth. The bank is targeting a modest maiden dividend for 2016.

Shawbrook, which specialises in lending to small and medium businesses, said it would raise gross proceeds of around £90m from the flotation.

Chief executive Richard Pyman said: “Our focus remains on providing UK customers with a fresh, pragmatic approach to lending and savings whilst driving further growth by maximising opportunities in existing markets, capitalising on the embedded growth in our current loan book and developing a range of products to facilitate expansion into adjacent segments.”

Sir George has announced that he is to stand down once a new chairman for Shawbrook is found.

Meanwhile, Standard Life executives have received close to £10 million worth of shares from long-term incentive plans.

Chief executive David Nish sold almost £2.1m of the £4.45m of shares acquired through two different award plans to cover the tax liabilities but retained 494,482 shares in the Edinburgh-based insurance giant.

The move took his total holding in the insurer and asset manager to more than 2.3 million shares.

Standard Life Investments boss Keith Skeoch was given around £3.8m through the vesting of three separate schemes.

He sold £1.78m worth to meet the tax liability retaining 417,659 shares to take his total holding to almost two million.

European and UK chief executive Paul Matthews also received about £1.5m of shares from the bonus schemes and sold all of them. Standard Life shares closed at 475.6p.