NatWest Group Plc has agreed to buy back £1.26 billion ($1.6 billion) of its shares from the UK government as the Treasury continues to sell down its stake after a bailout during the financial crisis over a decade ago.
(Bloomberg) — NatWest Group Plc has agreed to buy back £1.26 billion ($1.6 billion) of its shares from the UK government as the Treasury continues to sell down its stake after a bailout during the financial crisis over a decade ago.
The off-market purchase of 469.2 million shares will be made at Friday’s closing price of 268.4 pence, according to a statement Monday. The deal will see the Treasury’s voting rights in the lender drop to about 38.6% from about 41.4% previously.
NatWest’s shares were trading up 1.2% as of 11:13 a.m. in London, faring better than the FTSE 100.
The government will “keep other disposal options under active consideration, including by way of accelerated bookbuilds, when market conditions permit,” it said.
In April, the government extended a plan to continue selling down its stake in NatWest, which was around 84% at its peak. The latest disposal means the UK has sold more than half its shareholding.
“This transaction reduces government ownership below 40% and demonstrates positive progress on the bank’s strategic priorities and the path to privatization,” Chief Executive Officer Alison Rose said in a statement.
The UK remains NatWest’s biggest shareholder about 15 years after the government rescued what was then Royal Bank of Scotland in a £45.5 billion bailout.
The lender’s shares have recovered some of the losses suffered during this year’s banking turmoil, RBC analyst Benjamin Toms said by phone. The government previously indicated that its breakeven price on the bailout was about 400 pence — which NatWest’s stock hasn’t reached in recent years.
At this point, the government is arguably “just really trying to maximize their returns rather than recoup the original investment in the stock,” Toms said.
At its first-quarter results last month, NatWest’s guidance stoked worries that the boost to margins from higher interest rates was starting to fade. The bank is also due to start the search for a new chair as Howard Davies, 72, prepares to step down by mid-2024.
Read More: NatWest Chair Davies Says Bank Will Start Search for Successor
Goldman Sachs International is acting as privatization adviser to the government, while the trading plan is being managed by Morgan Stanley & Co. International Plc.
(Updates with latest share price in third paragraph, chart, analyst comment from eighth paragraph.)
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