NatWest sale move ‘biggest privatisation for a decade’
MINISTERS could flog off part of the Government’s 39% stake in NatWest bank to the public this summer – at a likely loss to the taxpayer.
UK Government Investments director Holger Vieten told MPs the share sale – the biggest privatisation since Royal Mail over a decade ago – “potentially could happen” in June.
No date has been set, but the Government would like to make the sale in the summer.
Mr Vieten told the Treasury Committee: “It’s very much a work in progress.”
In his Autumn Statement in November, Chancellor Jeremy Hunt evoked the privatisations of the 1980s by announcing that the Government plans to sell some of its 39% stake in NatWest to retail investors.
The taxpayer’s stake in the bank is a legacy of the bailout it received in 2008, which prevented it from collapsing and devastating the economy.
In order to recapitalise what was then known as Royal Bank of Scotland, the Government injected £46billion into the bank in exchange for 84% of the shares.
The Treasury has so far recovered £16.9billion from selling NatWest shares to institutional investors and back to the bank, as well as from dividend payments. However, City experts warn unless they more than double before the planned summer sale and remain high for future sales, taxpayers are all but certain to make a multi-billion loss on their NatWest shares.
The Government’s stake in NatWest is currently valued at £7.4billion.
Experts point out that the shares are well below the Government’s break-even level and that it is likely to have to sell them at a discount to tempt investors.
Russ Mould, investment director at AJ Bell, said: “Given that the Government’s average in price was £5 and the shares are at £2, even allowing for dividends and share buybacks, the taxpayer is looking at a substantial loss.”
However, given the calamitous impact the RBS collapse would have had on the nation, Mr Mould argued that taking a loss on NatWest shares was a price worth paying.
He added: “That was the trade-off at the time.”