The UK government on Tuesday sold £1bn of its NatWest shares back to the bank, thus making a huge stride in furthering the process of privatization of the latter. The Treasury on November 11 announced that its stake in the bank has reduced from 14.2% to 11.4% following the sale. The shares traded at £3.81 each, the close price on November 8, and represent another major move in the government’s long-term process of completely privatizing its stake in NatWest, originally bailed out during the 2008 banking crisis.
The state has cut its holding in NatWest by three quarters since the start of 2024, slashing its shareholding to below a third from around 38% in December 2023. The purchase is the fourth buyback portion that the state has recovered from selling its shares and brings its total recovered to over £20 billion-a fraction of the £46 billion invested to rescue the bank, then called the Royal Bank of Scotland, 16 years ago.
Previous Conservative governments had tried and failed to sell shares to retail investors, hoping to reproduce the success of the 1980s Tell Sid privatization of British Gas. Plans for an initial public offering were abandoned, however when the government’s campaign but the new Labor government, with Chancellor Rachel Reeves at the helm, has said the retail sale will not be pursued. Instead, the Treasury plans to exit its stake by 2025 or 2026, through different methods of disposal based on market conditions.
The £1 billion buyback is the second of its kind in 2024 after shareholders approved for NatWest to repurchase up to 15% of shares annually. The transaction reflects the bank’s strong performance, said Chief Executive Officer Paul Thwaite, as a key milestone on the road to full privatization. Since Labor’s election victory in July, shares of NatWest have gained nearly 20%, cementing the positive momentum on the bank’s financial recovery.
Goldman Sachs and Morgan Stanley are advisers to the process, while Merrill Lynch advises NatWest.
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