This dividend payment will be reflected in our first quarter 2016 financial statements, reducing Tangible Net Asset Value per share by approximately 10 pence. The equivalent Common Equity Tier 1 impact as at FY 2015 would have been c.50bps.
On retirement, the DAS will be re-designated as a single B share which will be subsequently cancelled. Following the conversion in 2015 of the B shares held by HMT into Ordinary Shares, the retirement of the DAS will complete the normalisation of RBS’s capital structure.
Ross McEwan, RBS Chief Executive, said:
“On the back of progress we have made in strengthening the bank's balance sheet in recent years, I am pleased that we are today able to repay the UK Government £1.193 billion to finally retire the Dividend Access Share.
This is another important milestone in our plan to resume capital distributions to our shareholders, and represents one less hurdle in our path to build the number one bank for customer service, trust and advocacy”.
Background to the DAS
The DAS was issued in 2009 when HMT provided £25.5 billion of equity capital to RBS in exchange for B shares. RBS also entered into the Asset Protection Scheme (‘APS’) and the Contingent Capital Facility (‘CCF’) with HMT. The DAS was created to provide enhanced dividend rights to HMT on the new capital support provided. RBS exited the APS in October 2012 and terminated the CCF in December 2013.
Under the DAS Retirement Agreement of 2014, RBS agreed to pay HMT an initial DAS dividend of £320 million which was paid in that year. A further £1.18 billion in DAS dividend to HMT (plus daily interest at a rate of 5% per annum from 1 January 2016) was required to retire the DAS.