Spiralling cost to taxpayer of the Big NatWest Bailout

Share price fall adds to £33bn bill for financial crisis failures LOSER: THE TAXPAYER

THE cost of bailing out NatWest is set to soar after the latest plunge in the bank’s share price.

Taxpayers are already on the hook for more than £33billion, according to the latest estimates by the Office for Budget Responsibility, the independent watchdog. But the bill is on track to be even higher.

That is because the OBR’s forecast – which included the cost of rescuing much smaller lenders Bradford & Bingley and Northern Rock during the financial crisis – was made earlier this year when NatWest’s shares traded above £3.00.

The shares have since fallen to as low as £1.80 after the lender warned on profits amid the reputational fallout from the debanking affair – involving Nigel Farage, pictured below – that cost chief executive Alison Rose her job.

The share price dive is the latest blow for taxpayers who have been tied to the bank’s fortunes for 15 years.

‘This is a reminder that many of our recent problems and continuing pressure on government budgets relate to the banking collapse and rescue in 2008,’ said Sir Vince Cable, who was Business Secretary in the aftermath of the bailout.

Cable said there was ‘no real alternative to temporary nationalisation’ at the time. But the then-Labour Government ‘arguably could have got a better price’ if it had not been ‘in a hurry’ to save the bank, which was then known as Royal Bank of Scotland, he added.

The Government paid £45.5billion – about £5.00 a share – for an 84 per cent stake in the stricken lender at the height of the financial crisis. It has since reduced its stake to 38.5 per cent via a series of share sales at much lower prices, crystallising losses for taxpayers.

A final taxpayer exit from the lender has been delayed until at least 2026.

A Treasury spokesman said: ‘We remain committed to selling our entire shareholding of NatWest Group by 2025-26, but we will only do so if we are getting a fair deal for taxpayers.’

The OBR’s calculations include dividends NatWest has paid in recent years, but these are more than offset by the ongoing cost of the debt-funded bailout.

Taxpayers have lost out in other ways. In 2010, the bank sold its payment subsidiary RBS Worldpay to private equity firms Advent and Bain for £2billion, to comply with EU rules. Advent and Bain floated Worldpay five years later at £5billion, but in 2018 it was sold again for £8 billion.

Taxpayers have also had to pick up their share of the tab for a series of misconduct fines totalling more than £700million since 2010. These included £217million in 2014 for manipulating the foreign exchange markets on top of a £87.5million penalty a year earlier for rigging interest rate benchmarks.

The largest fine – £265million – was paid in 2021 for not properly monitoring £365million which was deposited into the account of a Bradford jeweller.

‘We should all be livid,’ said Andy Agathangelou, founder of the Transparency Task Force. ‘The people who pay the fines are us as taxpayers and shareholders.

‘There’s the massive bailout cost and then the ongoing cost for naughtiness. All the time the senior folk get off lightly,’ Agathangelou added in a reference to former RBS boss Fred Goodwin.

Ian Fraser, author of a book on RBS, said: ‘It was largely thanks to Goodwin’s reckless, incompetent and hubristic leadership that the bank came within hours of meltdown.

‘If he had managed it better, taxpayers would not be taking a massive hit from the bank’s slow reprivatisation, nor would it still not be fully fixed 15 years on.’

One of the reasons there was still so much public anger about bank bailouts was their ‘unfairness’,

Fraser added. ‘They largely enabled bankers to get back to business as usual, but they came with far too few conditions attached.

‘Individuals such as Goodwin were not held to account.

‘Both before and after he voluntarily agreed to reduce it, his egregious pension had come to symbolise much that was wrong with the banking sector – not least the rewards for failure.’

Agathangelou said a lack of regulatory oversight encouraged ‘toxic cultures in banks that see fines as a cost for doing business, paid by innocent shareholders’.

Rose was hired in 2019 to try to detoxify the bank, but her abrupt departure has cast doubt on the lender’s future direction.

NatWest insists it has undergone ‘the biggest corporate turnaround in history’.

It points to consistent profits, dividends and share buybacks, a strong balance sheet and reduced Government ownership.

‘I am inheriting a very different NatWest compared to my predecessor, one that is more customer focused, financially resilient and well positioned to maintain its recent strong performance,’ said Rick Haythornthwaite, who replaces Sir Howard Davies as chairman next year.

Former commercial banking boss Paul Thwaite has taken over as interim chief executive for an initial year while a permanent successor to Rose is found.

‘We should all be livid... senior folk get off lightly’