2008 THE GREAT BANK CRASH
UK
Taxpayer stake in NatWest Group may be slashed to less than 40% as Treasury looks to offload billions in shares over next 12 months

Two £1.1bn share sales were made by the UK Government in March and May

The Treasury sold another two tranches totalling £2.5bn each in 2015 and 2018

Taxpayers are expected to lose £38.8bn from the sale of NatWest Group shares

By HARRY WISE FOR THIS IS MONEY
PUBLISHED: 07:13 EDT, 22 July 2021 

The Treasury is set to sell more of its stake in NatWest Group in a move that could leave the banking giant in majority private ownership for the first time since before the global financial crisis.

UK Government Investments (UKGI), a Treasury-owned body that administers its NatWest stake, said it had directed Morgan Stanley to gradually offload up to 15 per cent of its shares over a year-long period from next month.

It means the taxpayer's ownership stake might reduce from the 54.7 per cent it currently holds to less than 40 per cent, having already fallen by about 7 per cent this year following two sell-downs.

Sell-off: The Government said it had directed Morgan Stanley to gradually offload up to 15 per cent of its shares over a year-long period from next month

In March, the Treasury announced that it had sold £1.1billion worth of shares back to NatWest - previously known as Royal Bank of Scotland (RBS) until July last year - before selling the same amount two months later.


It sold another two tranches totalling £2.5billion each in 2015 and 2018 that cut its ownership share from 78.3 per cent to 62.4 per cent as part of plans to eventually trade its whole stake in the financial services group by 2023-24.

However, these sell-offs ignited considerable controversy as they were all traded at a significant loss compared to the average 502p-per-share price the Government paid to bail out RBS over a decade ago.

NatWest Group's shares were down 1.1 per cent to 197.4p this morning, though they have risen by 24 per cent since the start of the year.

According to recent estimates from the Office for Budget Responsibility, of the £45.8 billion spent to prop up the bank during the crisis, the taxpayer is expected to make a loss of £38.8billion.

The deadline to sell the entire taxpayer stake in NatWest was also pushed back a year when the coronavirus crisis struck the UK, as a global sell-off saw stock markets around the globe collapse.


Saved: NatWest Group was known as RBS until July last year. The UK Government became the bank's majority owner in 2008 after spending £46.8billion bailing it out

The Treasury additionally missed out on a dividend payment last year when regulators decided to ban payouts by financial institutions during the height of the pandemic in order to buffer capital stocks and incorporate potential loan losses.

Those restrictions were partially relaxed in December, and NatWest subsequently declared a dividend in 2021 of 3p a share, handing £225million to the Government as the biggest shareholder.

It later reported pre-tax operating profits surged by 82 per cent to £946million for the first three months of 2021 thanks to expectations for fewer loans to turn sour due to the pandemic and a jump in mortgage lending and customer deposits.

NatWest came close to going bust in 2008 soon after it bought Dutch bank ABN Amro in 2007 - despite investor warnings - as part of a consortium in what was the largest takeover ever in the financial services industry.

Six months afterwards, it launched a record-breaking £12billion rights issue and went on later that year to report a half-year loss of nearly £700mllion, its first loss in four decades, as a result of credit crunch write-downs of £5.9billion.

The UK Government eventually rescued it in October 2008 and took a 43 per cent stake in Lloyds Bank after spending £20.3billion bailing it out. It started selling its shares in Lloyds in 2013 and eventually sold its last stake four years ago.