Royal Bank of Scotland has unveiled a bumper £1.7bn payout for shareholders, delivering a surprise windfall for the taxpayer.

The bank announced a special dividend of 12p per share alongside an ordinary interim payment of 2p per share.

An estimated £1bn of the £1.7bn payout will be returned to the taxpayer, owing to the UK Government's stake in the bank.

It comes as RBS said it had achieved its highest half-year bottom-line profits in more than a decade, with attributable profits jumping 130% to £2bn.

Meanwhile, operating pre-tax profits outstripped forecasts, rising 48% to £2.7bn.

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

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 Mr McEwan's successor, nor was any new provision made for PPI claims.