Royal Bank of Scotland has paid £1.2bn to the government, clearing the way for dividend payments to ordinary shareholders and abolishing its so-called dividend access share arrangement.
The bank, still 72.6 per cent owned by the taxpayer, made the deal with the government to give it priority over dividends after its £45.8b bailout during the 2007-09 financial crisis.
RBS had announced it would make the payment in the first half of this year when it reported results last month.
Ordinary shareholders shouldn't hold their breath for shares however, with the first year scheduled for payments being pushed back to 2017 at the earliest from 2016 previously.
RBS is expected to remain on the government's books for the foreseeable future after it posted its eighth consecutive annual loss earlier this year, though has been working to reduce its costs and shore up its balance sheet.
The government did sell 5.4 per cent of its holding in August 2015, for £3.30 per share. The the share price is currently languishing around £2.30.
Laith Khalaf, senior analyst at Hargreaves Lansdown said:
RBS is heading in the same direction as Lloyds and will probably get there in the end, but it’s going to be a long haul. The risk for shareholders is that while the bank is still getting to its feet, the economy takes a nosedive and knocks it back to square one.
The RBS payment is around 10 times the amount the Treasury is expecting to get from Lloyds dividend payments in the first half of this year.