RBS reveals bumper £1.7billion dividend windfall for shareholders

Royal Bank of Scotland has unveiled a bumper £1.7 billion dividend payout, delivering a welcome boost for shareholders including the British taxpayer.

The partially state-owned bank announced a special dividend of 12p per share alongside an ordinary interim payment of 2p per share this morning.

Approximately £1billion of the £1.7billion total will go into the Government coffers thanks to the stake in the bank taken as part of its financial crisis bailout.

The hefty payout has been facilitated by the bank’s highest half-year profits in more than a decade, with a 130 per cent jump to £2billion.

Meanwhile, operating pre-tax profits outstripped forecasts, rising 48 per cent to £2.7billion.

Shares in the bank have fallen 5.6 per cent to 204.8p following the update though.

The figures were boosted by the sale of its stake in Saudi bank Alawwal, which completed its merger with Saudi British Bank in June.

Attributable profit for the second quarter was up 35 per cent to £1.3billion. Costs were down by £173million, with a target in place for £300million savings by the end of the year.

Net lending was up 2.5 per cent, while the bank recorded £14.3billion in gross new mortgage lending.

No new provisions have been made for further PPI claims ahead of this month’s deadline.

Chief executive Ross McEwan said: ‘Given the uncertain and competitive environment, we are focused on the areas we can control; costs are down, capital and liquidity are strong, and we continue to grow lending to the real economy.’

No announcements were made regarding the hunt for McEwan’s successor, who is leaving to become boss of National Australia Bank.

Russ Mould, investment director at AJ Bell commented:  ‘Despite all the excitement about Royal Bank of Scotland paying £1.7 billion in dividends to shareholders – including the Treasury which will get about £1 billion given it still holds a major stake in the company – the real story is that the bank is highly unlikely to meet its financial targets.

‘If you exclude the sale of a stake in Saudi Arabia’s Alawwal Bank then its return on tangible equity in the first half of the year was only 7.5 per cent. That’s some way short of the 12 per cent target for 2020.

‘Elements of the story are unchanged, namely that RBS is still suffering from margin pressure thanks to a price war in the mortgage market,’ he continued.

‘With the increasing prospect of a Brexit no-deal on the horizon, Royal Bank of Scotland looks to be in a difficult situation.’

‘And for investors holding the shares as a source of income, they will need to consider the risk of a volatile share price and the potential for capital losses. The market is certainly spooked by today’s announcement given how the shares have fallen.’

Majestic Wine sells retail arm for £95m to focus on Naked Wines

High street retailer Majestic Wine is set to sell all its stores for £95m as it transitions into an online-only company.

US private equity firm Fortress is buying the outlets, securing 1,000 jobs as it committed to keeping the 200-store network, which had a turnover of £300m last year.

“Majestic has grown through periods of dramatic change, I know we have the recipe to do it again,” said a Fortress spokesperson.

“We want to keep investing in our stores, in our people and our product – everything you can feel, touch and sip. After all, you cannot taste wine online.”

Majestic managing director Joshua Lincoln added that he had received “thousands” of emails from concerned customers when the retailer looked like it may close in March.

At the time Majestic said it would focus on its online division Naked Wines, which it bought in 2015. Money from the sale of Majestic will be used to cut debt and invest in Naked.

A separate sale of a freehold property to a separate third party buyer will bring Majestic’s full retail proceeds up to £100m.

“I am delighted that we have managed to secure an independent future for both Naked and Majestic Retail and Commercial, allowing both companies to pursue growth by focusing on their unique propositions,” Majestic chief executive Rowan Gormley said.

Major Majestic shareholder Gatemore Capital Management, which bought a stake in early 2019, welcomed the sale.

“Having worked closely with the board and management to ensure shareholder value is maximised, we are excited for the company’s prospects going forward as a standalone, high-growth and profitable business,” managing partner Liad Meidar said.

The investor had pushed for any sale to divide Majestic and Naked, believing the two woudl perform better independently of one another.

Gatemore also has a 3.8 per cent stake in Naked Wines.

Majestic said it had received multiple bids in June as it pushed to sell off its store network to focus on Naked Wines.

At the time it said Naked had “a greater potential for growth”.

Activist investor Elliott and private equity firm Opcapita were also reportedly in the running to acquire Majestic’s bricks-and-mortar business.

Saudi’s offshore purchase of UK media stakes attacked

The government has criticised a move by a Saudi investor to snap up stakes in the companies behind London’s Evening Standard and The Independent newspapers.

Two deals in 2017 and 2018 handed offshore companies backed by Mohamed Abuljadayel, a Saudi investor, large minority holdings in the publishers.

The stake purchases were yesterday criticised by a legal representative for the government as “clandestine”, according to the Financial Times.

The Evening Standard is controlled by Evgeny Lebedev, 39, son of the Russian businessman Alexander Lebedev, and is edited by George Osborne, the former chancellor of the exchequer. Mr Abuljadayel acquired a 30 per cent stake in the London paper from Mr Lebedev in 2018 via a Cayman Islands company. It followed a deal to buy a 30 per cent stake in Independent Digital News and Media the previous year using another Cayman Islands-registered vehicle.

However, last month the government decided to intervene in the stake acquisitions.