NatWest is to buy back about 5 per cent of its shares from the UK government for £1.2bn, reducing the Treasury’s voting rights in the lender to less than 50 per cent for the first time since 2008.
The off-market purchase of almost 550mn shares, equivalent to 4.9 per cent of the shares in issue, means the Treasury will be left with a 48 per cent stake. The UK lender will buy the shares at Friday’s closing price in London of 220.5p. The transaction is expected to be settled on Wednesday.
The government has owned the majority of NatWest, which used to be called Royal Bank of Scotland, since it was rescued at the height of the financial crisis.
It has repeatedly pushed back its deadline to offload the rest of its stake as political and economic uncertainty hit the bank’s share price.
RBS and the government have said in the past that it was inevitable that the Treasury would suffer a loss as it reduced its stake because NatWest is a significantly smaller bank than it was before the financial crisis, and the purchase in 2008 was a rescue deal rather than an investment.
A booming mortgage market and more than £1bn of loan impairments being written back helped the bank to a net profit of £2.95bn last year, a sharp reversal from a £753mn loss in 2020.
NatWest’s shares have risen almost 15 per cent over the past year.