NatWest steps closer to full privatisation with £1.26bn share buyback

NatWest steps closer to full privatisation with £1.26bn share buyback

NatWest Group plc has agreed to an off-market purchase of 469.2 million of its shares from HM Treasury, amounting to £1.26 billion in consideration.

This deal, settled at 268.4p per share, will be finalised on 24 May 2023 and is a step towards the UK government’s goal of full privatisation by 2026.

The purchased shares represent 4.95% of the company’s issued ordinary share capital, decreasing the government’s ownership from 41.4% to approximately 38.69%. The government initially obtained an 84% stake in the bank during the 2008 financial crisis, rescuing NatWest, then known as Royal Bank of Scotland Group, from collapse with a £46bn bailout.

This transaction is the sixth block sale of NatWest shares since the financial crisis, and it will lead to the cancellation of 336.2 million of the bought shares while the remaining 133 million will be held as treasury shares. Holding these shares will grant NatWest added flexibility in managing its capital base, including the allotment of ordinary shares in relation to its employee share plans.

The UK government’s move aligns with its commitment to avoid losing taxpayer money in the process of disposing of its NatWest stake. This disposal is dependent on the state of the financial markets and the assurance of value for money for taxpayers.

This strategy follows a similar path to that of the Lloyds Banking Group, which bought back its last shares from the government in 2017.

NatWest Group CEO, Alison Rose, viewed the transaction positively. She said: “This transaction reduces government ownership below 40% 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.”

Share icon
Share this article: