THE Edinburgh-based Royal Bank of Scotland group has paid its first dividend to shareholders since it was bailed out by the taxpayer ten years ago.

RBS almost collapsed in the 2008 financial crisis and has since been engaged in a massive restructuring exercise that has included paying billions of dollars in fines and charges over such actions as misselling of mortgages in the US .

The bank is still owned by the Westminster Government which has reduced its stake to 62% and is hoping to return it to the private sector within five years. The Treasury pocketed £150 million as a result of the dividend payout.

After announcing in August that it would be paying a dividend as soon as it had completed its $4.9 billion (£3.8bn) settlement with the US Department of Justice over mortgage-backed securities, the bank announced on Friday that is has now paid a 2p dividend to investors, which include about 190,000 private shareholders.

Earlier this year, the government sold a tranche of RBS shares at 271p each, almost half the 502p a share it paid for them 10 years ago.

The taxpayer at one time owned more than 80% of the bank, but former chancellor George Osborne started the sell-off which has continued under Philip Hammond who earlier this year sold a 7.7% stake in RBS at a £2.1bn loss to the UK taxpayer.

The sale of around 925m shares brought the public holding in RBS down from approximately 70.1% to 62.4% resulting in proceeds of just £2.5bn at 271p per share.

Most City experts predict that even with the share price recovering, the UK Government will still take a loss of billions of pounds on the bailout.

RBS chief executive Ross McEwan said the dividend payment could be followed by a payment of “excess capital” to shareholders.

He said: “I’m pleased to be able to pay a dividend to our shareholders; a small return after their many years of patience and a testament to the hard work of everyone at this bank.

“This is another important milestone in our turnaround, almost 10 years to the day that RBS was rescued by the British taxpayer.

“We have created a smaller, safer bank that is generating more sustainable profits.

“Our capital position is above our target and we are also looking to return any excess capital as soon as possible to shareholders.”

Earlier this week, McEwan told the BBC that there remained a long way to go in terms of rebuilding trust in the bank, while chairman Howard Davies said last month that taxpayers are “unlikely to recoup their investment in full,” adding “the focus on survival over a decade has had a cost”.

A Treasury spokesman said: “We welcome the dividend payment, which demonstrates the continued progress RBS has made in resolving its major legacy issues and achieving its first full year of profit since the crisis.

“All money recovered from our shareholding in RBS will be used to pay down the national debt.”