Santander is officially out of the sin bin.

On Thursday the Madrid-based bank announced that the US Federal Reserve had lifted an order banning its US holding company, or subsidiaries, from paying dividends or making any capital distributions.

The order, imposed in September 2014, came after Santander Consumer USA paid its US parent a dividend of $52m. According to the Fed, that violated restrictions put on the bank following a failed stress test in March 2014.

Scott Powell, CEO of Santander Holdings USA, said that the return to regular levels of supervision felt like a “turning point” for the bank in America, underscoring the “key improvements we’ve made to strengthen our capital position, risk management and governance.”

In failing the bank in 2014, the Fed said it found a catalogue of flaws in key areas, including how Santander manages its capital, daily liquidity needs, risk management and corporate governance.

That verdict – followed by more failures in 2015 and 2016 – set off a series of management changes in Santander’s operations in the US, including the departure in 2015 of Thomas Dundon, the founder and CEO of Santander Consumer, the subprime car-loans business based in Dallas.

The bank was given the all-clear in 2017’s stress test – but only after the Fed eased the rules, exempting all foreign banks and banks with less than $250bn of assets from the qualitative part of the exam.

Mr Powell noted that Thursday’s announcement meant that Santander is now moving “into a normal capital approval cycle, like most large banks in the US.”

Ana Botín, group execution chairman, said on Thursday: “We have strengthened our business in the US significantly in recent years, and while we know there is more to do, the Federal Reserve’s announcement today is a clear demonstration of the significant progress we’ve made.”

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