{"id":132988,"date":"2021-07-22T14:46:09","date_gmt":"2021-07-22T14:46:09","guid":{"rendered":"https:\/\/precoinnews.com\/?p=132988"},"modified":"2021-07-22T14:46:09","modified_gmt":"2021-07-22T14:46:09","slug":"rishi-sunak-to-offload-further-chunk-of-state-backed-natwest-over-next-12-months","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/rishi-sunak-to-offload-further-chunk-of-state-backed-natwest-over-next-12-months\/","title":{"rendered":"Rishi Sunak to offload further chunk of state-backed NatWest over next 12 months"},"content":{"rendered":"
The Treasury is to sell a further chunk of NatWest in a trading plan over the next 12 months as it further reduces its stake in the bank.<\/p>\n
NatWest, previously called Royal Bank of Scotland (RBS), was bailed out by the government in a £45.5bn rescue deal during the financial crisis more than a decade ago and remains 54.7% owned by the taxpayer.<\/p>\n
The government said that under the trading plan, to commence on 12 August, shares “will only be sold at a price that represents value for money for taxpayers”.<\/p>\n
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But it is likely to crystallise a further loss for the Treasury, which bailed out RBS at 502p a share during the financial crisis.<\/p>\n
They closed at just under 200p on Wednesday night, before details of the latest sale were announced, giving the bank a market value of £23bn.<\/p>\n
The government had owned more than 80% of RBS in the wake of the crisis and has gradually been reducing its stake, most recently with two share sales earlier this year<\/strong>.<\/p>\n Shares in the bank are held through UK Government Investments (UKGI).<\/p>\n The latest trading plan was authorised by chancellor Rishi Sunak on the advice of UKGI.<\/p>\n “The implementation of a trading plan represents continued progress towards the government’s plan to return this shareholding, acquired as a result of the 2007-2008 financial crisis, to private ownership,” the Treasury said.<\/p>\n <\/p>\n The plan will involve selling shares in the market through appointed broker Morgan Stanley “in an orderly way at market prices over the duration of the plan”.<\/p>\n “Shares will only be sold at a price that represents value for money for taxpayers,” the government said.<\/p>\n “There is a cap on the total number of shares that could be sold of 15% of the total number of NatWest Group shares being traded in the market over the 12 month duration of the plan.<\/p>\n “The final number of shares sold will depend on, amongst other factors, the share price and market conditions throughout its duration.”<\/p>\n The cap means the Treasury will sell only sell shares to the value of 15% of what is being traded in the market – a value that does not include its own present stake or stock which is held, for example by institutional investors.<\/p>\n The Treasury was unable to give a figure for the size of the total stake it expects to dispose of by the end of the trading plan.<\/p>\n NatWest’s return to the private sector has been a much more protracted affair than that of fellow bailed-out bank Lloyds Banking Group – with the government disposing of<\/strong> its last remaining stake in that bank in 2017.<\/p>\n The Treasury said in March that it was targeting returning the bank to full private ownership in 2026, a year later than previously planned.<\/p>\n Its latest announcement comes as official figures show the continuing parlous state of public finances thanks to the coronavirus pandemic – with borrowing falling compared to last year as the economy recovers but monthly interest payments on the ballooning debt pile hitting a record £8.7bn<\/strong>.<\/p>\n The crisis has also weighed on banks, including NatWest, which reported a £351m annual loss<\/strong> for 2020.<\/p>\n NatWest is the name for the group which trades under both the NatWest and Royal Bank of Scotland brands.<\/p>\n The group was previously known as Royal Bank of Scotland but decided last year to switch to NatWest<\/strong> as it tries to shed the bitter legacy of its meltdown in the financial crisis.<\/p>\n Shares were trading 1% lower early on Thursday following the latest announcement.<\/p>\n