NatWest buys back £1.1bn of shares from UK government
12:01, 22 March 2021
Shares in NatWest dipped on Friday afternoon after it announced its intention to buy back £1.1bn ($1.5bn, €1.2bn) of its shares from the UK government.
The government rescued the British bank, formerly known as Royal Bank of Scotland, in the wake of the Global Financial Crisis in 2008 by buying 84 per cent of its shares for around £45bn.
NatWest is currently limited to buying about 5 per cent of its stock a year from the government. The bank’s latest decision will bring the state’s stake down from 62 per cent to 59.8 per cent.
CEO Alison Rose stated: “We believe this is a good use of capital for the bank and our shareholders.”
The sale will represent a £1.8bn loss for the government on its investment. This will not come as a great shock to those in Westminster.
NatWest’s share price has failed to recapture its pre-2008 momentum, still standing 96 per cent off the highs reached shortly before the crash. The Office for Budget Responsibility recently estimated that the state will make a loss of around £39bn on the rescue once full costs are factored in.
The bank reported a full-year loss last month of £351m, rather than the pre-tax profit of £1.3bn predicted by analysts. Despite this and ongoing questions surrounding its potential failure to prevent money laundering, the bank’s share price has risen by more than 50 per cent over the past year.
By mid-afternoon on Friday, however, NatWest traded down 0.5 per cent at 189.50 pence.