Britain unveils plan to return NatWest to majority private control

0
88
imageStock Markets14 hours ago (Jul 22, 2021 15:05)

© Reuters. FILE PHOTO: A man walks past ATM machines at branch of the NatWest bank in Manchester, Britain September 21, 2017. REUTERS/Phil Noble/File Photo

By Rachel Armstrong and Iain Withers

LONDON (Reuters) – Britain’s government on Thursday unveiled a blueprint for returning NatWest to majority private ownership within a year, more than a decade since bailing out the lender at the height of the global financial crisis.

The finance ministry said it had instructed Morgan Stanley (NYSE:MS) to sell NatWest shares on its behalf in a scheme starting on Aug. 12 and running until Aug. 11, 2022.

NatWest shares have rallied 23% since the start of the year, supported by the recovery from the pandemic. But they are still far below the 502-pence level of the 2008 taxpayer rescue, making further substantial losses on the bailout likely.

At 1120 GMT, NatWest shares were trading at 196.80 pence, down 1% from the previous day’s close.

The British state currently owns around 54.7% of NatWest after spending 45 billion pounds ($61.87 billion) bailing out the lender 13 years ago.

The government said it planned to sell up to 15% of the total volume of NatWest shares being traded on the market over the duration of the plan.

That would roughly equate to around 2 billion pounds, or 8.8% of shares, based on the last three month of trading volume, analysts at Credit Suisse (SIX:CSGN) estimated in a note.

Morgan Stanley will only sell shares at or above a price per share that the government has determined “delivers value for money for the taxpayer”.

“This move will be welcomed by investors and should improve liquidity in the stock as well as reinforcing the government’s desire to reduce/exit its shareholding, even if the plan weighs on the share price over the next 12 months,” said Ronan Dunphy, banking analyst at Goodbody.

“If the market is judged to be able to digest the sell down without an uncomfortable price reaction, we wouldn’t be surprised to see (the government) seek to reduce its shareholding further.”

NatWest CEO Alison Rose welcomed the government’s plan and said it showed the bank was on a better footing.

The plan to sell shares on the open market also opens the door to NatWest buying back up to 10% of its shares.

Details of the share sale come after the government sold 1.1 billion pounds worth of NatWest shares through a one-off stock offering in May.

NatWest also bought a similar chunk of stock directly from the government in March, but is prevented from launching another directed buyback for 12 months under company rules restricting it to buying around 5% of its stock through this route.

The government said it may also sell NatWest shares through other means such as accelerated bookbuilds or directing share buybacks.

($1 = 0.7273 pounds) (This story corrects 12th paragraph, removing reference saying buyback would accelerate privatisation)

Britain unveils plan to return NatWest to majority private control

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

LEAVE A REPLY

Please enter your comment!
Please enter your name here