I can inform the House that on 22 May 2023 the government sold c.469m shares in NatWest Group (NWG, formerly Royal Bank of Scotland) to NWG by way of a directed buyback transaction. The transaction value amounts to approximately £1.26bn, representing approximately 4.95% of the company.
This announcement demonstrates the continued progress being made towards the government’s intention to return its shareholding in NWG to private ownership by 2025-26, subject to market conditions and achieving value for money for taxpayers. Following this transaction, the government’s shareholding stands at approximately 38.6%.
Policy rationale
The government is committed to returning NWG to full private ownership now that the original policy objective for the intervention in NWG – to preserve financial and economic stability at a time of crisis – has long been achieved.
The government only conducts sales of NWG shares when it represents value for money to do so and market conditions allow.
Directed buyback detail
The government, supported by advice from UK Government Investments, concluded that selling shares to NWG, 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. NWG has shareholder approval to purchase up to 4.99% of its share capital from HMT on a rolling 12-month basis. This is the third sale of shares via an off-market share sale directly to the company and sixth large block sale of NWG shares undertaken by the government.
The sale concluded on 22 May 2023, with NWG purchasing a limited number of its government owned shares. A total of approximately 469m shares (approximately 4.95% of the bank) were sold at the 19 May market closing price of 268.4p per share. The government’s shareholding now stands at approximately 38.6%. The reduction in the government’s shareholding is less than the percentage sold as NWG will cancel most of the purchased shares.
Details of the sale are summarised below.
Government stake in NWG pre-sale | c.3,949m shares |
Total shares sold to NWG | c.469m shares |
Share price at market close on 19/05/2023 | 268.4p |
Total proceeds from the sale | c.£1.26bn |
Government stake in NWG post-sale (as % of total voting rights) | c.38.6% |
Fiscal impacts
The net impacts of the sale on a selection of fiscal metrics are summarised as follows:
Metric | Impact |
Net sale proceeds | c.£1.26bn |
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 c.£1.26bn |
Public Sector Net Financial Liabilities | Nil
|
Public Sector Net Liabilities | Nil
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