Government cuts stake in NatWest to below 30% for first time since bank crisis

25 March 2024 , 14:42

817     0

Royal Bank of Scotland expanded to become the world's largest bank under former boss Fred Goodwin (Image: PA Archive/PA Images)

The UK Government's ownership in NatWest Group has fallen to below 30% for the first time since the bank was nationalised during the 2008 financial crisis.

The Treasury confirmed on Monday that its stake in the bank, which also owns Royal Bank of Scotland (RBS) and Coutts, is now 29.82%, down by just over one percentage point. This leaves the Government with a stake worth just under £7billion. Although it's a small reduction, it marks a significant milestone.

NatWest was nationalised in 2008 and 2009, with several multibillion-pound bailouts leaving the Government with an 84% stake in the company, then known as the RBS Group. After briefly becoming the world's largest bank, RBS was nearly bankrupt by early October 2008.

On October 7 that year, then chairman Sir Tom McKillop informed then Chancellor, Alistair Darling, that the group would run out of money later that day. To prevent a disastrous collapse of RBS, the Bank of England lent it several billion pounds. The next day, the Government announced it would take a £20billion stake in the bank. Since then, the Government, not wanting to own a bank, has gradually sold off its stake in NatWest.

This process took a long time initially, but in recent months, the sell-off has accelerated. In 2018, the Government owned 62% of NatWest Group, but by the end of 2022, this had dropped to 45.9%, and it was down to 37.98% on December 31 last year.

Britain faces the worst recession among G7 partners, economists predict

The Government has announced plans to sell all its shares in NatWest by March 2026. They might even start selling some shares to retail investors. NatWest said: "We welcome the Government's continued commitment to returning NatWest Group to private ownership."

"With the Government shareholding now below 30%, we have been pleased with the recent momentum to achieving this shared ambition, which we believe is in the best interests of the bank and our shareholders."

Bim Afolami, who works for the Treasury, said, "This is a significant milestone demonstrating we're making excellent progress on fully returning NatWest to private ownership. In addition to our successful trading plan, we are now looking ahead to a retail offering of NatWest shares which could come as soon as this summer, subject to market conditions and value for money."

Lawrence Matheson