THE Treasury sold 580 million shares in NatWest to the City today, taking a £1.8 billion hit in the process.
Despite that loss, City institutions expect it to continue to offload its stake, down by 5% today to 54.8%.
Such moves are likely to have the backing of NatWest senior management, who are keen that the bank move on from its bailed-out past. Alison Rose, the CEO, has already changed the bank’s name from Royal Bank of Scotland as part of that process.
The Treasury raised £1.1 billion from the share sale at 190p – it would have got £2.9 billion at the 500p at which RBS was bailed out in 2008.
That £46 billion bail out is likely to lead to a loss of £39 billion in all, given how rough the environment has been for bank shares. NatWest shares have in fact doubled this year, encouraging the Treasury to move fast and at least recoup some of its investment.
Two weeks ago NatWest reported an 82% surge in profits in the first quarter to £946 million, prompting chatter that a share sale was imminent.
Rose at the time said that getting the government off the shareholders register was “a priority” for her, though strictly speaking she does not have a say in when the Treasury decides to move.
NatWest shares today fell 7p to 190p, exactly in line with the share sale price, but a discount to where the stock was trading last week.
City banks including Morgan Stanley, Barclays and Goldman Sachs worked on the deal.
Last year, the Bank of England effectively banned banks from paying dividends to shareholders. It wanted them to preserve capital through the worst of the pandemic.
As the biggest shareholders, that move cost the government hundreds of millions of pounds.
NatWest did later pay a 3p a share divi, worth £225 million to the Treasury.