NatWest to buy £1.1bn of its shares from UK Treasury

NatWest is spending £1.1bn to buy almost 5% of its shares from the UK Treasury, which became the bank’s majority shareholder during the financial crisis.
The bank, formerly known as Royal Bank of Scotland, has agreed to buy 590.7m of shares owned by taxpayers for 190.5p each, representing 4.86% of its share capital. The purchase price is the same as NatWest’s closing price on Thursday.

The transaction will reduce the UK’s stake in NatWest to 59.8% from 61.7% and will reduce the bank’s common equity tier 1 capital ratio by 66 basis points. The purchase has triggered a £500m contribution by NatWest to its main pension scheme leading to a total reduction in the capital ratio of 72 basis points.

The UK bailed out RBS in 2008 to prevent the bank from collapsing at the peak of the financial crisis. The government has struggled to offload its stake by selling shares in the market.

NatWest said it would hold 200m of the shares in its treasury and cancel the remaining shares.

“Holding ordinary shares as treasury shares gives the company the ability to cancel such shares at a later date, or re-issue treasury shares quickly and cost effectively, and may provide the company with additional flexibility in the management of its capital base, including the allotment of ordinary shares in relation to its employee share plans,” NatWest said.

The off-market purchase will settle on 23 March.