RBS shares rise as W&G deal opens door to dividends

RBS shares rose nearly 7 per cent on the news.

Investors sent RBS stock surging 6.9 per cent to 259p after the bank revealed that the Government had provisionally agreed with Brussels an alternative plan to a forced sale of its Williams & Glyn (W&G) business.

It is a boost for RBS, which remains 73 per cent owned by the Government, with analysts at Deutsche Bank saying it is now a “realistic possibility” that the lender will declare a dividend next February in respect of its 2017 results.

It would be RBS’s first shareholder payout since it was bailed-out in 2008 and would mark a significant achievement for chief executive Ross McEwan, who is bracing to deliver the bank’s ninth consecutive annual loss on Friday.

However, while acknowledging the potential of dividends, Laith Khalaf, senior Analyst at Hargreaves Lansdown, warned that the Edinburgh-based bank still “has a plateful of problems to digest”.

He said: “If RBS is relieved of the obligation to sell off Williams & Glyn, that would remove a major obstacle from the bank returning to some measure of normality, and even potentially paying a dividend, though it’s best not to count those chickens before they’re hatched,” Khalaf says. “Things are still challenging for the bank, it’s on course to report a ninth consecutive year of losses, and the light at the end of the tunnel is still obscured by US litigation and restructuring costs.”

Meanwhile, it has also been reported that RBS is planning a reorganisation of its marketing department that may lead to further job losses.

According to the reports, the news emerged as a result of a teleconference to staff by chief marketing officer David Wheldon. However, no exact figures for potential job losses were given in the communication.

RBS’s marketing operations are based in Edinburgh and London.