Government transfers more NatWest shares for sale
NatWest Completes Privatization, Announces Share Buyback
NatWest, the UK's largest retail bank, has completed its privatization, marking the end of 17 years of government ownership that followed the 2008 financial crisis. The UK government's stake, once 82% after bailouts, was fully sold off by 2024, paving the way for the bank's return to private ownership.
Following privatization, NatWest announced a £750 million share buyback program, effective from the second half of 2025. The bank aims to distribute about 50% of its attributable profit to shareholders, supported by a strong capital position and guidance for a Return on Tangible Equity (RoTE) exceeding 16.5% in 2025.
The bank's financial performance has been impressive, with its operating pre-tax profit between July and September 2024 reaching £1.7 billion, nearly a third higher than the same period last year. This growth was partly driven by an increase in lending and the amount of money customers deposited with the bank.
However, the UK government's decision to abandon a public share sale for its remaining stake in NatWest was announced in July 2024. The Labour chancellor, Rachel Reeves, told MPs that a public sale of NatWest's shares would not happen due to lack of value for money and would be a bad use of taxpayer money.
The decision means that retail investors will not have the opportunity to purchase NatWest shares. A retail share sale would have required offering discounts worth hundreds of millions of pounds to the public, which Reeves deemed damaging for taxpayers.
The transactions bring NatWest closer to full privatisation. The bank's current status is fully privatized with a focus on rewarding shareholders and consolidating its financial strength. There is no indication of further government ownership or intervention planned.
The future involves shareholder value return initiatives, ongoing operational improvements, digital transformation, and growth within the UK banking sector. NatWest's share price has almost doubled over the past 12 months, with a rise of just shy of 5% at the end of last month.
However, some, like Sarah Coles, head of personal finance at Hargreaves Lansdown, have expressed disappointment over the decision to exclude retail investors from the NatWest share sale. Analysts were forecasting profits of £1.5 billion for NatWest, a figure that seems to have been comfortably surpassed.
NatWest was once 84% owned by the state following a £46 billion bailout during the financial crisis. The bank's privatization and subsequent share buyback program signal a new era for the bank, one that is focused on shareholder value and strategic growth.
- NatWest's focus on shareholder value and strategic growth, emphasized by the share buyback program of £750 million, indicates a shift towards personal finance and investing within the bank's business strategy.
- The UK government's decision to exclude retail investors from purchasing NatWest shares during the privatization process has raised concerns about future investment opportunities in the realm of finance and business.
