RBS owner NatWest 'entering new chapter' after taxpayer sell-off reaches milestone

Royal Bank of Scotland owner NatWest is “entering a new chapter” with the next couple of years likely to see the bailed-out financial giant returned fully to private ownership.

Analysts said the Treasury was on track to reduce its stake in the lender to zero by 2025 or 2026 following news of the latest share sell-off. The UK government confirmed that it had sold £1.26 billion of its stake in NatWest back to the banking group. It is the latest in a series of stake sales by UK Government Investments as the state seeks to whittle down its shareholding in the RSB parent, following its near £46bn bailout during the 2008 financial crisis.

The latest sale will bring the taxpayer’s minority stake down to about 38.7 per cent from around 41 per cent. That holding once stood at a peak of 84 per cent. In March last year, NatWest confirmed it was majority-owned by private investors for the first time since the bailout, in another milestone for the recovery of the business.

Sophie Lund-Yates, lead equity analyst at investment platform Hargreaves Lansdown, said: “The UK government has now sold over half of its shareholding in NatWest, following peak ownership of 84 per cent when it had to rescue the firm during the global financial crisis. While the change doesn’t fundamentally change much about NatWest, other than giving it a little more flexibility over the capital base, the broader change is a symbolic one. Removing government stabilisers is a clear marker of the bank entering a new chapter.”

Victoria Scholar, head of investment at Interactive Investor, noted: “Last month, the government announced a two-year extension to its trading plan. The Treasury is aiming to return NatWest to private ownership by 2025-2026 while attempting to ‘achieve the best value for the taxpayer’. Shares in NatWest have struggled this year, caught up in the banking sector turmoil with the collapse of SVB and the rescue deal for Credit Suisse. However, with shares up almost 15 per cent year-on-year to Friday’s close, the government clearly decided that now is a good moment to sell some shares.”

The shares were sold to the bank at Friday’s closing price of 268.4p each, giving the firm a current market value of around £25.4bn. Last month, the government extended its current trading plan to sell off some of its stake by two years.

NatWest Group chief executive Alison Rose said: “This transaction reduces government ownership below 40 per cent and demonstrates positive progress on the bank’s strategic priorities and the path to privatisation. NatWest Group’s robust balance sheet and capital generation allow us to continue lending responsibly and supporting the customers and communities we serve whilst delivering sustainable returns to our shareholders, including the government.”

Last month, NatWest reported an operating profit before tax of £1.8bn for the first three months of the year, despite seeing a jump in customers withdrawing money at the start of the year. The result came in ahead of analysts’ expectations of £1.6bn for the quarter and some 50 per cent higher than the £1.2bn recorded a year earlier.