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NatWest buys £1.2 billion of its shares back from the UK Government

NatWest buys £1.2 billion of its shares back from the UK Government

NatWest Group, the British banking and insurance firm, has reportedly regained majority private control of itself after agreeing to repurchase more than £1.2 billion of its shares from the UK government, over 13 years after taxpayers bailed out the corporation during the financial crisis.

In an announcement to the stock market on Monday, the firm, previously known as the Royal Bank of Scotland Group (RBS), stated that it had decided to make an off-market acquisition of 550 million shares from HM Treasury, representing 4.91% of its share capital, at Friday's current share price of 220.5p.

The agreement will be finalized on Wednesday, giving the British government a 48.1% stake in the financial organization, a symbolic milestone after over a decade of majority state ownership. The government held an 84% stake in the company at its peak.

The £46 billion bailout was announced by Gordon Brown's Labour government in October 2008, following the bankruptcy of Lehman Brothers, the US investment bank, that wreaked havoc on the global banking sector.

Alison Rose, NatWest’s CEO, stated on Monday that Reducing government ownership to less than 50% is a significant achievement for NatWest and another evidence of its success. The taxpayer, which in 2008 paid an average of 500p per share, has suffered a significant loss as a result of the current NatWest share purchase price.

At Friday’s stock market closing price, the government's remaining stock will be valued almost £11.9 billion.

The UK government had intended to sell the full public ownership in NatWest by 2023-24, but the Covid outbreak forced them to postpone the sale.

The independent budget regulator, the Office for Budget Responsibility, announced last week that the state has recouped £134 billion from its financial meltdown interventions, in contrast to a £137 billion outlay.

The Treasury has adopted a hands-off approach to its ownership in the bank, allowing it to operate in a similar fashion to other commercial banks. During the past four years, it has paid over £1.1 billion in bonuses to its bankers, with Rose receiving £4 million for 2021, over ten times than the highest-paid civil officials.

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Meghna Singh

An English Literature graduate, Meghna Singh ventured into the profession of content development to incorporate her knack for writing articles across verticals including technology, healthcare, business, and alike for News Origins and Newsorigins. She has also completed her MBA in Tourism and worked as a content creator in the field of product development.