Royal Bank of Scotland (RBS)’s chief executive Ross McEwan has today given a strong hint that the bank will be able to resume paying dividends within just a few months.

McEwan, who took the helm of the bailed-out bank in 2013, said at a conference organised by Goldman Sachs in Frankfurt today that he is confident that RBS will pass stress tests set by the Bank of England this year.

The bank just failed last year’s stress test, which is designed to ensure it could withstand another financial crisis, and jumping that hurdle was one of the conditions set out by the Bank of England regulator the Prudential Regulation Authority (PRA) for resuming the dividend.

Read more: DEBATE: Was the government right to sell the latest tranche of RBS shares?

RBS was bailed out by the government at the height of the financial crisis, and has not paid a dividend for more than a decade as new executives have worked to restructure the massive institution and push it back to profitability.

Beginning to pay out dividends again should help boost the bank’s share price, and allow the government to sell its stake at a smaller loss.

“I think we will pass this year’s stress test,” McEwan said. “We are 250 basis points better on the start than we were last year, and we’ve taken assets off the books.”

He said the bank, which is currently undergoing a stress test, should have news on the dividend by its half-year results on 3 August, though he emphasised the final decision would be down to the regulator.

He also left it open as to whether he would announce a half-year dividend in August, or guide towards a full-year dividend later in the year.

As to the size of the dividend, McEwan said: “We have to remember this bank hadn’t made profits for 10 years until last year. Our ask will be modest and I think it should be modest.”

He mentioned the settlement of a massive fine with the US Department of Justice (DoJ) as one of the boxes which the regulator wanted to be ticked before the dividend could be resumed, as well as returning the bank to profitability.

Read more: RBS another step closer to privatisation after Saudi bank merger

RBS settled the DoJ fine earlier this year at $4.9bn (£3.7bn), and generated its first profit for a decade last year.

“We’ve done a huge amount of clean up of this business,” McEwan said.

A promise to pay dividends would help the government offload its stake in RBS, which it sold down to 62.4 per cent earlier this week.

McEwan said its investors were also in favour of it completing a share buyback to help the government’s exit, but he would not sacrifice a dividend to complete such a deal.

“I think the government has been an incredibly good shareholder,” McEwan added. “All of the change we’ve gone through, we needed a solid shareholder who understood the strategy and they’ve been there.”

RBS has been trying to retrench into its core markets, after former boss Fred Goodwin pursued years of debt-fuelled expansion which left the bank in “a mess”, according to its current CEO.

Read more: RBS to get new head from firm which manages government’s stake in the bank

Full story: RBS boss ‘confident’ on stress tests and hopes to resume dividend this year: City A.M.