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RBS just lost an obscene amount of money because it wanted to start paying dividends again

Lianna Brinded   

RBS just lost an obscene amount of money because it wanted to start paying dividends again
Finance2 min read

jokermoneyburn

The Dark Knight the Movie

The Royal Bank of Scotland just posted a horrific set of results.

And the main reason for why it lost a lot of money is because it had to pay for the right to start paying dividends to shareholders again.

The 73% state-owned bank said in a results statement that its losses nearly doubled to £968 million in the first quarter this year, compared to £459 million last year. It overshot analysts' expectations of £957 million.

This is because it forked out £1.2 billion to the UK Treasury in order for it to remove a block over paying dividends - money to shareholders out of its profits or reserves.

Around seven years ago, RBS had to beg the government for a bailout. Over 2008 and 2009 it borrowed £45.4 billion ($70.1 billion), worth 500p per share, from the taxpayer and it has yet to pay it back. As part of the deal, it would stop paying dividends.

So it decided to spend a lot of money and turn a huge loss in its first quarter so it could start giving stockholders a reward.

But it seems a bit all for nothing it's unlikely shareholders will get a payment any time soon, anyway.

Late on Thursday, RBS said it is likely to miss the European deadline to sell off its challenger bank Williams & Glyn by the end of 2017. Under the terms of its deal with the EU, RBS has to hive off W&G, just like Lloyds did with the sale of retail unit TSB.

On top of that, it warned that it will be spending a lot more than an originally planned £1.7 billion on upgrading its technology. In 2013, millions of customers were left unable to pay for goods and services or receive funds into their accounts, in the run-up to Christmas that year due to a massive IT glitch.

Meanwhile, the costs for restructuring the bank - under a plan which CEO Ross McEwan launched last year in February - has grown to £238 million. It has also set aside another £31 million in litigation and conduct expenses.

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