Treasury relieves £1.26bn of NatWest stock as government cuts its stake in the bank to less than 40%
- Treasury sells 469 million NatWest shares back to bank for 268.4 pence each
- Government interest in NatWest reduced from 41.4% to 38.6%
- NatWest was bailed out by the government in 2008 in a £45.5 billion bailout
The UK government is selling £1.26bn of NatWest stock back to the bank, reducing its stake in the lender it bailed out during the 2008 financial crisis to less than 40 per cent.
The sale of 469 million shares at Friday’s closing price of 268.4 pence per share will see the government’s stake in NatWest fall from 41.4 percent to 38.6 percent.
It comes a month after HM Treasury announced it had postponed plans to sell part of its stake in NatWest for two years after banking sector turmoil sent stock prices tumbling.
Share sale: NatWest bought back £1.26bn worth of shares from the government
NatWest, formerly Royal Bank of Scotland, was bailed out by the government in a £45.5 billion bailout in 2008.
The government bought its stake for 502 pence per share. Today, however, they are worth about 270 pence, reflecting a heavy loss to the taxpayer.
In April, the government said it will aim to get rid of a 15 percent stake by August 2025, rather than August this year.
This is to ensure taxpayers get “value for money” for the stock, which has been under pressure in recent weeks following the collapse of Silicon Valley Bank and UBS’ takeover of Credit Suisse. This created fears about the stability of the financial system.
In last month’s budget, the government confirmed its aim to fully privatize NatWest by 2026.
NatWest Stocks have struggled so far this year, but are up 15 percent over the past 12 months.
Russ Mould, investment director at AJ Bell, said: ‘The government has sold back some of the shares in NatWest, but the fact that it still owns 38.6 per cent means there is still a large overhang for the shares, which are likely to remain. the case for some time given the slow pace of sales.
“After all, it’s been 15 years since the government bailed out the bank, and the government still owns more than a third of the company.”