The UK government is to reduce its shareholding in NatWest to about 54.8% by disposing of a further 5% stake. In the process, the government will recoup around £1.1bn.
The latest sale follows the disposal of a 5% stake in March. The NatWest share price dipped by 3.6% to £1.90 following the latest UK government share disposal. On the other hand, the NatWest share price is ahead by 21% for the year to date.
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The then Labour UK government bailed out the then RBS in 2008, paying an average price of about £5.02 per share. In total, the government paid about £45.5bn to bailout RBS in October 2008, in the process acquiring an 80% stake.
As a result, successive governments have sold several tranches of shares at a loss. On a slightly more positive note, the government has started to receive dividends from its shareholding. For example, the government collected about £150m in October 2018 when RBS paid its first dividend since the original government bailout.
In 2018, the government revealed plans to sell off its then remaining 62.4% stake in RBS NatWest by 2024.
At the time, the government said it would offload RBS shares worth £3.6bn in 2019-20, followed by £2.5bn worth of shares in 2020-21. It then planned to sell £4.7bn worth of RBS shares in 2022-23 and £6bn in 2023-24
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By GlobalDataThe latest government plan is to dispose of its remaining NatWest shares by the end of the 2025-2026 fiscal year.
To try and recoup taxpayers’ money, the government started selling off its stake of RBS. In 2015, the government sold a 5.4% stake for £2.08bn. Almost three years later in June 2018, the government offloaded an additional 7.7% stake for £2.51bn.
RBS rebrand as NatWest
RBS rebranded as NatWest in February 2020.
At the time, the bank also ditched its target to achieve a 12% return on equity. CEO Alison Rose said that the bank would target a return on equity of between 9% and 11% in the medium to long term.
The bank’s challenged NatWest Markets unit continues to shrink. Looking ahead, the bank says that NatWest Markets will comprise about 10% of the group.
