Snapshot for week beginning 9 May. The British government has sold 5% of its stake in NatWest, one more step in its plan to return the banking group to majority private ownership, more than a decade since its rescue in the financial crisis.
In a development authorised by the chancellor, Rishi Sunak, the Treasury said it had sold 580m shares at a price of 190p a share in a competitive overnight sale to City investors, cutting the government stake in the bank from 59.8% to 54.8%.
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Beyond raising money for the national coffers, the government said, it was “committed to achieving a strong and diverse banking sector to benefit UK customers”.
The divestment is another step in the government’s plan to improve competition in banking that gives real choice to retail and small business customers and supports the wider economy.
The deal brings the public stake in NatWest, formerly known as Royal Bank of Scotland, closer to minority ownership after years of stop-start attempts to return the bank to the private sector dating back to the government of David Cameron.
Accelerating privatisation
The disposal marks the government’s fourth sale of its NatWest shareholding since 2015, and its second transaction in two months.
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By GlobalData“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 Treasury said.
The government also raised £1.1bn in March when NatWest agreed to buy 591m shares back from the government to accelerate reprivatisation, in an off-market deal authorised by Sunak.
The push to sell down the government stake comes as the chancellor seeks ways to combat record levels of public borrowing, after the exchequer racked up a £303bn deficit in the financial year ending in March amid the economic fallout from Covid-19.
The 2008 bailout
The government bailed out RBS at the height of the 2008 financial crisis, injecting £45bn to keep the bank afloat in order to prevent an even worse meltdown in the banking system.
The taxpayer stake has been slowly reduced from 79% in 2015, when the then chancellor, George Osborne, launched the first disposal of shares at a loss of more than £1bn to the public.
It comes despite pressure from campaigners and the former Labour leader Jeremy Corbyn to use public ownership of NatWest to create a network of state-owned regional banks.
Taxpayers are not expected to recover all of the money pumped into the bank, with the shares still worth less than half the price the government paid more than a decade ago. NatWest shares were down 2% on Tuesday at 193p.
Analysts expect NatWest to be fully returned to private ownership by 2025, almost two decades on from its effective nationalisation.
