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UK government sells £1.1bn stake in NatWest

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·Senior City Correspondent, Yahoo Finance UK
·2 min read
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NEWCASTLE-UNDER-LYME, ENGLAND - OCTOBER 30: A NatWest Bank cash out sign in seen on October 30, 2020 in Newcastle-under-Lyme, England. HSBC Chief Executive Noel Quinn said the bank will review pricing strategy for fees and lending to make sure they have a sustainable and profitable business, amid the record-low interest rates. (Photo by Nathan Stirk/Getty Images)
A NatWest Bank cash out sign in seen on October 30, 2020 in Newcastle-under-Lyme, England. Photo: Nathan Stirk/Getty Images

The UK government has successfully sold a £1.1bn ($1.5bn) stake in NatWest Group (NWG.L), the British banking group it bailed out during the financial crisis.

The Treasury said on Tuesday it had sold 580 million shares in NatWest at 190p per share via an accelerated book build. Shares were sold to institutional investors. Names were not disclosed. 

The sale price represents a 3.5% discount to Monday's closing price and a 5% discount to where NatWest was trading at the close of last week. Shares in the bank had recently rallied to levels not seen since the onset of the pandemic, boosted by a strong rebound in mortgage lending and a sunny outlook for the UK economy.

Read more: NatWest beats profit forecast as it unlocks £100m loss provision

The UK government injected just over £45bn into NatWest — which was then known as Royal Bank of Scotland — at the height of the 2008 financial crisis to rescue the bank from the brink. The investment gave the Treasury a controlling stake in the bank.

Tuesday's sale takes the government's stake from 59.8% to 54.8. It markets the fourth share sale by the government since the bank's bailout over a decade ago. It is the second share sale in two months — the Treasury sold another £1.1bn chunk of the bank in late March.

The accelerated pace comes as the government looks to repair public finances, which have been battered by the COVID-19 pandemic. The UK has been forced to borrow more than £300bn over the last year to help pay for its pandemic response and to protect the economy.

The latest share sale was first reported by Sky New on Monday afternoon and shares in the bank slumped 5% on the report. NatWest was trading down another 4% on Tuesday morning at 189.45p per share — just below the book build price.

NatWest shares sold off sharply on news of the sale. Photo: Yahoo Finance UK
NatWest shares sold off sharply on news of the sale. Photo: Yahoo Finance UK

Goldman Sachs (GS), Barclays (BARC.L), Citigroup (C), Morgan Stanley (MS), and Rothschild & Co all worked on the share sale. Law firm Freshfields Bruckhaus Deringer advised on the deal.

Watch: Should I save money or pay off debt during the pandemic?