Royal Bank of Scotland has agreed to pay £1.5 billion to the taxpayer in a bid to return to the private sector.
The state-backed lender is hoping the move will allow it to resume future dividend payouts.
RBS, which is 80 per cent owned by the Treasury, has agreed the payout so its share price rises and it can break even on its £45 billion Government bailout.
Under its deal with the Treasury, the bank was unable to make payouts to ordinary shareholders.
It has now agreed to pay £320 million this year followed by another £1.18 billion to exit the arrangement.