Fresh banking turmoil has erupted in the US and continental Europe. Unfortunately, the UK government has still not finished clearing up after the last bout of mayhem. It still owns about 41.5 per cent of NatWest, as Royal Bank of Scotland is now known.
The government has extended a deadline to drip feed shares into the market under a trading plan until August 2025. That would be less than three years short of the 20th anniversary of the £45.5bn bailout of the debt-laden lender in the great financial crisis.
It can also sell shares to NatWest directly or in chunks. The current deadline for the UK to wash its hands of NatWest entirely is 2026. Some glaciers move faster.
Shares in the bank have dropped 9 per cent since the start of March to trade at about 267.70p. Banking stocks have been hard hit by the collapse of Silicon Valley Bank and Credit Suisse’s shotgun marriage to UBS.
Economic secretary to the Treasury, Andrew Griffith, insists the government will achieve the “best value for the taxpayer”. But the idea the UK is ever going to sell out for a decent price relative to an average bailout price of 502p evaporated long ago. Recent declines will add to criticism of losses incurred.
UK ministers will plough on, but they should have made a clean break with NatWest years ago. The UK’s original 84.4 per cent holding was a legacy of financial mismanagement in banking and government. It was never an investment. The stake has created unhelpful conflicts of interest both for politicians and successive chief executives.
During the two-year extension, up to 15 per cent of the aggregate total volume of NatWest shares traded in the market can be sold. Lex calculates that based on total volumes in the past two years more than 17 per cent of total shares outstanding could be offloaded.
UK Government Investments, steward of the stake, has also been selling shares to NatWest via direct share buybacks. It previously sold larger chunks to investors via accelerated bookbuilds. These involve discounts. But it is hard to see the government meeting its target without more of them.
The Lex team is interested in hearing more from readers. Please tell us what you think of the UK’s stake in NatWest in the comments section below.
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