The government has granted itself an extra 12 months to sell down the taxpayers’ remaining £11.3 billion stake in NatWest as the bleak global economy depresses the value of bank stocks.
The Treasury said yesterday that it would dispose of its remaining 48.5 per cent of the group, formerly Royal Bank of Scotland, only when it “represents value for money to do so and market conditions allow”.
The government has been offloading shares to institutions or directly to NatWest since 2015, but last July it stepped up efforts to accelerate the lender’s return to private hands under a 12-month “trading plan” to drip-feed stock into the market.
That plan has now been extended to August next year. A Treasury statement said: “The actual number of shares sold on any day under the trading plan will depend on market conditions, among other factors.” It added that, as before, Morgan Stanley would continue to have “full discretion” to conduct an orderly sale.
The government bailed out the bank during the 2008 financial crisis and its stake in the group peaked at 84 per cent in 2009. The rescue cost the taxpayer about £45 billion.
Under the trading plan there is a cap on NatWest shares that can be sold — measured at 15 per cent of the aggregate total trading volume in the bank’s stock. This ensures that the sales do not excessively depress the share price.
Since the plan began last year, when the government owned a 54.7 per cent stake, 703 million shares have been sold, raising £1.6 billion. In March, the government’s stake went below 50 per cent for the first time since 2008, when NatWest bought back just under 5 per cent of the government’s shares for about 220p each. Alison Rose, chief executive, said it was an “important milestone” in the bank’s return to normality.
Shares in NatWest closed up 6¾p, or 3 per cent, at 228p yesterday.
The government has a target to fully return NatWest to private ownership by 2026 depending on market conditions, but is unlikely to recoup anything like the amount spent on its rescue. The estimated average price the Treasury paid for its shares is about 500p each.
