The Treasury is to sell another part of NatWest as part of a trading plan over the next 12 months as it further reduces its stake in the bank.
NatWest, formerly known as Royal Bank of Scotland (RBS), was bailed out by the government as part of a £ 45.5 billion bailout deal during the financial crisis more than a decade ago and remains held in 54.7% by the taxpayer.
The government said under the swap plan, which will begin on August 12, the shares “will only be sold at a price that represents good value for taxpayers.”
But it is likely to crystallize a further loss for the Treasury, which bailed out RBS to 502p per share during the financial crisis.
They closed at just under 200p on Wednesday evening, before details of the latest sale were announced, giving the bank a market value of £ 23bn.
The government held over 80% of RBS as a result of the crisis and has gradually reduced its stake, most recently with two sales of shares earlier this year.
The bank’s shares are held through UK Government Investments (UKGI).
The latest business plan was authorized by Chancellor Rishi Sunak on advice from UKGI.
“The implementation of a trading plan represents continued progress towards the government’s plan to return this stake, acquired following the 2007-2008 financial crisis, to private property,” the Treasury said. .
The plan will involve the sale of shares to the market through the designated broker Morgan Stanley “in an orderly manner at market prices throughout the life of the plan”.
“The shares will only be sold at a price that represents good value for the taxpayer,” the government said.
“The total number of shares that can be sold is capped at 15% of the total number of NatWest group shares traded on the market during the 12-month term of the plan.
“The final number of shares sold will depend, among other factors, on the share price and market conditions throughout its term.”
The cap means that the Treasury will only sell shares for a value of 15% of what is traded in the market – a value that does not include its own current stake or its shares held, for example by institutional investors.
The Treasury has not been able to give a figure for the size of the total stake it expects to divest by the end of the trading plan.
NatWest’s return to the private sector has been a much longer affair than that of bailout Lloyds Banking Group – with the government have his last remaining stake in this bank in 2017.
The Treasury said in March it aimed to bring the bank back to full private ownership in 2026, a year later than expected.
Its latest announcement comes as official figures show the continued precarious state of public finances thanks to the coronavirus pandemic – with borrowing down from last year as the economy recovers but payments falling. ‘monthly interest on rising debt reach a record £ 8.7 billion.
The crisis also weighed on banks, including NatWest, which reported an annual loss of £ 351million for 2020.
NatWest is the name of the group that operates under the NatWest and Royal Bank of Scotland brands.
The group was previously known as the Royal Bank of Scotland but decided last year switch to NatWest as he tries to shake off the bitter legacy of his collapse into the financial crisis.
The shares were trading down 1% early Thursday after the latest announcement.