Economic Secretary (): I would like to update the
House on the disposal of £1bn worth of government-owned NatWest
Group (formerly Royal Bank of Scotland, RBS) shares, representing
approximately 3.2% of the company, by way of a directed buyback
transaction on 11 November 2024.
The government's remaining shareholding represents approximately
11.4% of voting rights in the company which demonstrates the
continued progress being made towards the government's intention
to return its shareholding in NatWest to private ownership by
2025-26.
Rationale
The government is committed to returning NatWest to full private
ownership, given that the original policy objective for the
intervention in NatWest – to preserve financial and economic
stability at a time of crisis – has long been achieved. The
government only conducts sales of NatWest shares when it
represents value for money to do so and market conditions allow.
Format and Timing
The government, supported by advice from UK Government
Investments, concluded that selling shares to NatWest, in a
single bilateral transaction, represented value for money.
Share buybacks are a common practice undertaken by companies
looking to efficiently deploy their excess capital. Following
approval of amendments to the Buyback Contract between HM
Treasury (HMT) and NatWest by non-government shareholders at the
2024 NatWest Annual General Meeting, the bank is now able to
purchase up to 15% of its share capital from HMT on a rolling
12-month basis. This is the fifth sale of shares via an
off-market share sale directly to the company.
The sale concluded on 11 November 2024, with NatWest purchasing a
limited number of its government owned shares. A total of
approximately 262.6m shares (around 3.2% of the bank) were sold
at the 8 November closing price of 380.8p per share. The
reduction in the government's shareholding is less than the
percentage sold following the cancellation of shares by NatWest.
Following this transaction, the government's shareholding stands
at approximately 11.4%.
Details of the sale are summarised below:
|
Government stake in NatWest pre-sale
|
c.14.2%
|
|
Total shares sold to NatWest
|
c.262.6m shares
|
|
Share price at market close on 08/11/2024
|
380.8p
|
|
Total proceeds from the sale
|
£1bn
|
|
Government stake in NatWest post-sale (as % of total
voting rights)
|
c.11.4%
|
Fiscal impacts
The net impacts of the sale on a selection of fiscal metrics are
summarised as follows:
|
Metric
|
Impact
|
|
Net sale proceeds
|
£1bn
|
|
Retention value range
|
Within the valuation range
|
|
Public Sector Net Borrowing
|
Nil
There may be future indirect impacts as a result of the
sale. The sale proceeds reduce public sector debt. All
else being equal, the sale will reduce future debt
interest costs for government.
The reduction in government's shareholding means it will
not receive future dividend income it may otherwise have
been entitled to through these shares.
|
|
Public Sector Net Debt
|
Reduced by £1bn
|
|
Public Sector Net Financial Liabilities
|
Nil
|
|
Public Sector Net Liabilities
|
Nil
|
