The UK government will cut its stake in NatWest for the second time in two months, taking advantage of a recent rally in the bank’s share price to bring it closer to a full return to private ownership.
UK Government Investments, which manages the government’s shareholding, said after markets closed on Monday that it would sell about 5 per cent of NatWest stock, worth roughly £1.1bn based on Monday’s closing price, through an accelerated bookbuild.
It will bring the government’s stake in NatWest, previously known as Royal Bank of Scotland, to about 54.8 per cent, raising the prospect that the bank could be returned to majority private ownership within the year, 13 years after its bailout in the financial crisis brought it under state control.
Monday’s placing follows the sale of a similar volume of shares in March, which were bought back by NatWest.
Shares in NatWest, along with most of its peers in the banking sector, have climbed rapidly in recent months on the back of optimism about the UK’s economic recovery. The stock has risen 24 per cent so far in 2021 to 197p, though it has yet to fully recoup the losses suffered at the start of the pandemic. The shares fell 1.5 per cent on Monday after the news of the government’s planned sale, which was first reported by Sky News.
Details of the sale price and size are expected to be announced on Tuesday morning, but the deal will probably crystallise another substantial loss for taxpayers, who paid an average price of 502p per share to bail out the bank.
NatWest and the government have previously said it will be impossible to recoup the money pumped into the bank in 2008 because it has shrunk significantly in size since. RBS, as it was then known, briefly became the world’s largest bank by assets after the ill-timed takeover of ABN Amro, but came close to collapse after being caught up in the US subprime mortgage crisis.
The Treasury said in its budget in March that it intends to dispose of the rest of its shareholding by the end of the 2025-26 financial year.