Taxpayer stake in NatWest to be sold down further

The taxpayer stake in NatWest Group is set to be cut further after the Government announced plans to offload more shares in the part-nationalised banking giant.

UK Government Investments (UKGI), which manages the Government’s shareholding in NatWest, said it was aiming to sell shares over 12 months starting August 12 under a pre-arranged trading plan overseen by Morgan Stanley.

It plans to sell up to, but no more, than 15% of the total shares being traded on the market, which would further reduce the current 54.7% taxpayer holding in the bank.

UKGI and the Treasury said it would also keep “other disposal options open” alongside the 12-month trading plan.

It comes soon after the Government sold 580 million NatWest shares in May, raising £1.1 billion for the taxpayer.

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.

The latest share sale announcement 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.

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 recent estimates from the Office for Budget Responsibility, 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 unveiled a surge in first quarter 2021 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 and will update on interim results next week.

Last year, NatWest took a mammoth hit of £3.2 billion for these provisions over 2020 as a whole.