Ulster Bank will pay its parent company a dividend for the first time since the financial crisis, saying today that it had received regulatory approval to release €1.5 billion of capital.
In a statement to the stock exchange this morning, Ulster Bank said the dividend would be paid to Royal Bank of Scotland at the end of this month, subject to approval by its board.
The statement said that Ulster Bank remains in a strong capital position following the payment of the dividend, and stands significantly above regulatory capital minimums.
It added that the required regulatory approvals for payment of the dividend have been received from both the Central Bank and the European Central Bank.
Ulster Bank's chief executive Gerry Mallon said the move signalled a very important milestone for the lender and was evidence of its strengthening position.
"Ulster Bank remains very well capitalised with a strong balance sheet and is well-positioned to continue to support customers' ambitions through our excellent products and service," Mr Mallon added.
The payment will allow RBS, which had to prop up Ulster Bank with about £15 billion during the banking crisis, to release trapped capital at a group level.
Ulster Bank's Core Tier 1 capital (CET1) ratio - a measure of financial strength - will stand at 24% after the payment, significantly ahead of regulatory requirements.
The average aggregate core ratio of the 51 main European Union lenders ahead of stress tests this year was 12.6%, with all capital requirements factored in.
The bank is not alone among Irish lenders seeking to resume dividends.
Bank of Ireland, the country's largest bank by assets and in which the state holds a 14% stake, laid out plans in February for a resumption of dividends in the first half of next year.
But it said in July that the timing could be affected by Britain's vote to leave the European Union.
AIB, which had a CET1 ratio of 13.3% at the end of June, said yesterday that it is capable of paying a conservative, ongoing dividend to the state and that it is in regulatory talks over when it can restart payments.