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Government Shareholding in NatWest Group

Volume 700: debated on Monday 6 September 2021

I can today inform the House that on 22 July 2021 the Government announced a trading plan to sell part of the Government’s shareholding in NatWest Group (NWG, formerly Royal Bank of Scotland, RBS). This is a further step forward in the Government’s plan to return NWG to the private sector.

Rationale

It is Government policy that where a Government asset no longer serves a public policy purpose the Government may choose to sell that asset, subject to being able to achieve value for money. This frees up public resource which can be deployed to achieve other public policy objectives.

The Government are committed to returning NWG to full private ownership, now that the original policy objective for the intervention in NWG—to preserve financial and economic stability at a time of crisis—has long been achieved. The Government only conduct sales of NWG shares when it represents value for money to do so and market conditions allow. The announcement of this trading plan represents a further step forward for Government in exiting the assets acquired as a result of the 2007 to 2008 financial crisis.

Format and timing

The Government, supported by advice from UK Government Investments (UKGI), concluded that selling shares by way of an on-market trading plan will deliver value for money.

A trading plan involves selling shares in the market through an appointed broker in an orderly way at market value over the duration of the plan. Trading plans are an established method of returning Government-owned shares to private ownership, while protecting value for the taxpayer. This method was used in the sell-down of the Government’s stake in Lloyds Banking Group (in that case, from a lower starting point in terms of the Government’s percentage ownership).

This is the first use of a trading plan for disposals of NWG shares by the Government. This follows previous disposals of NWG shares via accelerated book builds in August 2015 and June 2018, a directed buyback selling shares to the company in March 2021, and a further accelerated bookbuild in May 2021. UKGI and HMT will keep other disposal options open, including by way of further directed buybacks and/or accelerated bookbuilds. The decision to launch the trading plan does not preclude the Government from using other disposal options to execute future transactions that achieve value for money for taxpayers, including during the term of the trading plan.

The trading plan commenced trading no earlier than 12 August and will run for 12 months, terminating no later than 11 August 2022. Shares will only be sold at a price that represents fair value and delivers value for money for the taxpayer. The final number of shares sold will depend on, amongst other factors, the share price and market conditions throughout the duration of the trading plan.

The Government will provide Parliament with further details at the end of the term of the trading plan.

[HCWS259]