Financial Services Update

Thursday 23rd June 2022 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

I can today inform the House that the Government have announced an extension to our existing trading plan to sell part of the Government’s shareholding in NatWest Group (NWG, formerly Royal Bank of Scotland, RBS) for a further 12 months from 12 August 2022. 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, given 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. At Budget 2021, the Chancellor set out the Government intention to fully dispose of our NWG shareholding by 2025-26

The Government only conduct sales of NWG shares when it represents value for money to do so and market conditions allow. This extension represents continued progress in exiting the assets acquired as a result of the 2007-08 financial crisis and returning NWG to private ownership.

Trading plan

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.

The trading plan for the Government’s NWG share- holding will be extended for 12 months, terminating no later than 11 August 2023. 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.

Since the trading plan was established, it has successfully sold approximately 703.5 million ordinary shares for total proceeds of approximately £1.6 billion as of 22 June 2022. The Government currently has a c. 48.5% shareholding in NWG.

UK Government Investments and HM Treasury will keep other disposal options open, including by way of further directed buybacks and/or accelerated bookbuilds. The decision to extend 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.

I will update Parliament with a further statement at the end of the trading plan.

[HCWS133]