The Treasury is to promote an additional chunk of NatWest in a buying and selling plan over the subsequent 12 months because it additional reduces its stake within the financial institution.
NatWest, beforehand referred to as Royal Financial institution of Scotland (RBS), was bailed out by the federal government in a £45.5bn rescue deal through the monetary disaster greater than a decade in the past and stays 54.7% owned by the taxpayer.
The federal government stated that below the buying and selling plan, to begin on 12 August, shares “will solely be bought at a value that represents worth for cash for taxpayers”.
However it’s more likely to crystallise an additional loss for the Treasury, which bailed out RBS at 502p a share through the monetary disaster.
They closed at slightly below 200p on Wednesday night time, earlier than particulars of the most recent sale had been introduced, giving the financial institution a market worth of £23bn.
The federal government had owned greater than 80% of RBS within the wake of the disaster and has steadily been lowering its stake, most lately with two share gross sales earlier this 12 months.
Shares within the financial institution are held via UK Authorities Investments (UKGI).
The most recent buying and selling plan was authorised by chancellor Rishi Sunak on the recommendation of UKGI.
“The implementation of a buying and selling plan represents continued progress in the direction of the federal government’s plan to return this shareholding, acquired because of the 2007-2008 monetary disaster, to personal possession,” the Treasury stated.
The plan will contain promoting shares available in the market via appointed dealer Morgan Stanley “in an orderly means at market costs over the length of the plan”.
“Shares will solely be bought at a value that represents worth for cash for taxpayers,” the federal government stated.
“There’s a cap on the entire variety of shares that could possibly be bought of 15% of the entire variety of NatWest Group shares being traded available in the market over the 12 month length of the plan.
“The ultimate variety of shares bought will rely on, amongst different elements, the share value and market situations all through its length.”
The cap means the Treasury will promote solely promote shares to the worth of 15% of what’s being traded available in the market – a price that doesn’t embrace its personal current stake or inventory which is held, for instance by institutional traders.
The Treasury was unable to offer a determine for the scale of the entire stake it expects to eliminate by the top of the buying and selling plan.
NatWest’s return to the non-public sector has been a way more protracted affair than that of fellow bailed-out financial institution Lloyds Banking Group – with the federal government disposing of its final remaining stake in that financial institution in 2017.
The Treasury stated in March that it was concentrating on returning the financial institution to full non-public possession in 2026, a 12 months later than beforehand deliberate.
Its newest announcement comes as official figures present the persevering with parlous state of public funds because of the coronavirus pandemic – with borrowing falling in comparison with final 12 months because the economic system recovers however month-to-month curiosity funds on the ballooning debt pile hitting a file £8.7bn.
The disaster has additionally weighed on banks, together with NatWest, which reported a £351m annual loss for 2020.
NatWest is the title for the group which trades below each the NatWest and Royal Financial institution of Scotland manufacturers.
The group was beforehand often known as Royal Financial institution of Scotland however determined final 12 months to change to NatWest because it tries to shed the bitter legacy of its meltdown within the monetary disaster.
Shares had been buying and selling 1% decrease early on Thursday following the most recent announcement.