- I would like to update the House on the disposal of £1 billion-worth of Government-owned NatWest Group—formerly Royal Bank of Scotland—shares, representing approximately 3.2% of the company, by way of a directed buyback transaction on 11 November 2024.The Government’s remaining shareholding represents approximately 11.4% of voting rights in the company, which demonstrates the continued progress being made towards the Government’s intention to return their shareholding in NatWest to private ownership by 2025-26.RationaleThe Government are committed to returning NatWest to full private ownership, given that the original policy objective for the intervention in NatWest—to preserve financial and economic stability at a time of crisis—has long been achieved. The Government only conduct sales of NatWest shares when it represents value for money to do so and market conditions allow.Format and timingThe Government, supported by advice from UK Government Investments, concluded that selling shares to NatWest, 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. Following approval of amendments to the buyback contract between HM Treasury and NatWest by non-Government shareholders at the 2024 NatWest annual general meeting, the bank is now able to purchase up to 15% of its share capital from HMT on a rolling 12-month basis. This is the fifth sale of shares via an off-market share sale directly to the company.The sale concluded on 11 November 2024, with NatWest purchasing a limited number of its Government-owned shares. A total of approximately 262.6 million shares—around 3.2% of the bank—were sold at the 8 November closing price of 380.8p per share. The reduction in the Government’s shareholding is less than the percentage sold following the cancellation of shares by NatWest. Following this transaction, the Government’s shareholding stands at approximately 11.4%.Details of the sale are summarised below:
Government stake in NatWest pre-sale
c.14.2%
Total shares sold to NatWest
c.262.6 million shares
Share price at market close on 8 November 2024
380.8p
Total proceeds from the sale
£1 billion
Government stake in NatWest post-sale (as % of total voting rights)
c.11.4%
Fiscal impactsThe net impacts of the sale on a selection of fiscal metrics are summarised as follows:Metric
Impact
Net sale proceeds
£1 billion
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 the Government.
The reduction in the Government’s shareholding means they will not receive future dividend income they may otherwise have been entitled to through these shares.
Public sector net debt
Reduced by £1 billion
Public sector net financial liabilities
Nil
Public sector net liabilities
Nil
[HCWS226]