Connect with us

Hi, what are you looking for?

Investing

Treasury sells NatWest stake at a discount to raise £1BN

Natwest

The government has sold a 5 per cent stake in NatWest, raising £1.1 billion, but had to discount the price by 7 per cent to find buyers in the overnight placing.

UK Government Investments said it had sold 580 million shares at 190p, reducing its stake in the former Royal Bank of Scotland from 59.9 per cent to 54.8 per cent.

The price was a 7 per cent discount to the 204p at which the shares were trading on Monday afternoon just before news of the placing leaked. It was a 4 per cent discount to the closing price on Monday.

The disposal crystallises a loss to taxpayers of about £680 million on the shares sold, with UKGI accepting a price 62 per cent lower than what the government paid for them in the rescue of RBS in 2008.

In the depths of the banking crisis, ministers injected £45.5 billion of fresh capital into RBS after it was hit by steep losses on subprime mortgages and the disastrous acquisition of the Dutch bank ABN Amro.

An initial government stake of more than 83 per cent has been reduced by previous share sales, most recently in March when NatWest itself used spare capital to buy £1.1 billion of government-owned shares in a transaction known as a directed buyback. That was priced at 190.5p.

The latest transaction means the Treasury has sold each of four tranches of shares at a lower price than the previous one. The first was a sale of a 5.4 per cent stake at 370p per share in 2015.

Ian Gordon, a banks analyst at Investec, said the timing of the latest sale was “entirely understandable” because the market price had been trading at its highest for a year. But he said NatWest still faced “a hard slog ahead” and the government had a long way to go to sell its holding completely. He rated the shares a “sell”.

According to Budget documents in March, the Treasury wants to divest the last of its shares in NatWest by March 2026 subject to market conditions and getting good value.

The placing was being handled by Barclays, Citi, Goldman Sachs and Morgan Stanley. UKGI was advised by Rothschild.

Appetite for bank stocks has been poor for some time because of the headwind of low interest rates and worries about Covid-related losses. However, in recent months that has improved. NatWest shares had more than doubled from a September low of 93p. That was in spite of the revelation in March that it was facing criminal proceedings over money laundering allegations.

Today in early trading, NatWest shares were fetching just over 192p.

Read more:
Treasury sells NatWest stake at a discount to raise £1BN

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

Latest

Economy

Benigno S.C. Aquino III, the Philippine president who tried to send corrupt officials to jail and took China to court for its island-building activities...

Economy

Personalities took to social media and their respective platforms to express their grief over the death of former President Benigno S. C. Aquino III on Thursday....

Economy

Cloud-based solutions support organizations in terms of collaboration and productivity during the current remote work challenges. As the usage of these tools continues to...

Economy

By Luz Wendy T. Noble, Reporter THE Philippines’ overall balance of payments (BoP) position posted a deficit of $1.39 billion in May, as the...

Economy

National Economic and Development Authority (NEDA) Secretary Karl Kendrick T. Chua stressed the need to fast-track the vaccination of workers to allow the economy...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Economy

US President Joseph R. Biden, Jr., will rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on...

Economy

THE Securities and Exchange Commission (SEC) has warned the public from investing or to stop any investment in a group named Maxxprofit Computer Trading...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.



Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!