The government has given itself an extra 12 months to sell off taxpayers’ remaining £ 11.3 billion of shares in NatWest as the grim global economy lowers the value of bank shares.
The Treasury said yesterday it would only divest its remaining 48.5 per cent of the group, formerly the Royal Bank of Scotland, when it “represents value for money to do so and market conditions allow”.
The government has transferred shares to institutions or directly to NatWest since 2015, but in July last year it intensified efforts to speed up the lender’s return to private hands under a 12-month “trading plan” to drip shares into the market.
That plan has now been extended to August next year. A statement from the Treasury Department said: “The actual number of shares sold on any given day during the trading schedule will depend on market conditions, among other factors.” It added that Morgan Stanley, as before, would continue to have “full discretion” to complete an orderly sale.
The government rescued the bank during the financial crisis in 2008, and its share in the group peaked at 84 per cent in 2009. The rescue cost taxpayers around £ 45 billion.
Under the trading plan, there is a ceiling on NatWest shares that can be sold – measured at 15 percent of the total total turnover in the bank’s share. This ensures that the sale does not push the share price too much.
Since the plan started last year, when the government owned a stake of 54.7 percent, 703 million shares have been sold, raising £ 1.6 billion. In March, the government’s stake fell below 50 per cent for the first time since 2008, with NatWest buying back just under 5 per cent of the state’s shares for around 220p each. Alison Rose, CEO, said it was an “important milestone” in the bank’s return to normalcy.
Shares in NatWest closed 6¾p, or 3 percent, to 228p yesterday.
The government has a goal of fully returning NatWest to private ownership by 2026 depending on market conditions, but it is unlikely it will recover anything like the amount spent on its rescue. The estimated average price that the Treasury paid for its shares is around 500p each.