Taxpayer nets £1.1bn from NatWest Group stake sale

The Government has sold another tranche of shares in banking giant NatWest Group, raising £1.1 billion for the taxpayer.

The Treasury has offloaded 580 million shares in NatWest at a discount price of 190p each to institutional investors, cutting its stake in the bank from 59.8% to 54.8%.

Shares in NatWest closed at 197.1p on Monday, but were down 3% at 190.9p on Tuesday after the sale announcement.

NatWest – formerly Royal Bank of Scotland (RBS) – has been majority-owned by the taxpayer since it was bailed out for £45.8 billion in 2008 at the height of the financial crisis.

But the latest stake sale takes the Government a step closer to ending its status as majority owner of the bank and its commitment to return NatWest to the private sector by 2025.

It comes less than two months after the previous stake sale, which saw NatWest buy back 591 million shares in March for 190.5p each, reducing its shareholding from 61.7% to 59.8%.

The Treasury, which has now completed four sales of government-owned shares in NatWest, said: “This sale represents further progress in the Government’s plan to return institutions brought into public ownership as a result of the 2007-2008 financial crisis to private ownership.

“The Government continues to keep all options and timings under review for future sales.”

The Government initially bought an 82% stake in the then RBS for 440p a share in 2008 to save the bank from complete collapse during the financial crisis.

According to the latest estimates from the Office for Budget Responsibility, (OBR) of the £45.8 billion spent to prop up the bank during the crisis, the taxpayer is expected to make a loss of £38.8 billion.

Last year, just as the coronavirus crisis struck the UK, the Treasury pushed back a deadline to sell the entire stake by a year, to March 2025, as a global sell-off saw stock markets around the globe collapse.

The Treasury also missed out on a dividend payment last year, due to regulators banning payouts by financial institutions during the height of the Covid-19 pandemic.

NatWest subsequently declared a dividend in 2021 of 3p a share, handing £225 million to the Government as the biggest shareholder.

The lender recently unveiled a surge in first quarter profits thanks to expectations for fewer loans to turn sour due to the pandemic.

It reported an 82% jump in pre-tax operating profits to £946 million for the first three months of 2021 after releasing £102 million of cash put aside for bad debts.

A year earlier, it put by £802 million for loan losses and took a mammoth hit of £3.2 billion for these provisions over 2020 as a whole.