Natwest shareholders have approved the bank’s proposal to buy more of its stock from the government to accelerate its privatisation, potentially leaving the Treasury with fewer shares to offer retail investors.
All of the lender’s proposals were carried by shareholders at its annual general meeting on Tuesday, including the ability to buy back up to 15 per cent of its stock from the government in a 12-month period, from a previous limit of 4.99 per cent.
Natwest’s proposal depends on new listing rules from the Financial Conduct Authority set to come into force later this year to make it easier for companies to make larger buybacks of stock from a major investor.
The government currently holds a stake of just under 30 per cent in Natwest, worth some £7.46bn. It originally took an 84 per cent stake in the lender, then known as Royal Bank of Scotland, to rescue it during the financial crisis in 2008.
The Treasury has gradually offloaded its stake over the years at a loss to the taxpayer and plans to fully privatise the bank by 2025-26. Natwest is able to make deals to buy back its shares from the government, doing this three times since 2021. It is next eligible to make a deal in May.
Chancellor Jeremy Hunt announced last November that the government would explore offering part of its remaining stake to retail investors as part of wider efforts to boost capital markets activity in London. Shares are expected to be priced at a discount to make them more appealing.
The Treasury is planning to launch a sale this summer at the earliest, subject to market conditions. Based on Natwest’s current market capitalisation, a 15 per cent haircut would reduce the government’s stake by roughly £3.75bn.
The government has further reduced the number of shares it could offer to the general public by accelerating its own trading plan in recent months. Its stake fell more than eight per cent between December and March.
Natwest chair Rick Haythornthwaite, who took up the role just last week, said on Tuesday that he was confident the bank’s current leadership team would see it return to full private ownership.
“There is undoubtedly a perception that there is more intervention from His Majesty’s Treasury than there actually is,” he added.
Tuesday’s AGM comes after a difficult year for the lender. Last July, both its group chief executive Dame Alison Rose and Coutts CEO Peter Flavel resigned in the wake of a “debanking” scandal involving former Ukip leader Nigel Farage.
Farage claimed that Coutts moved to close his account mainly due to his political views. The row has weighed heavily on Natwest’s public image and sparked a sharp rise in complaints over “debanking”.
The Brexiteer continues to be a vocal critic of the bank. In a video posted on X before the meeting, he said: “No member of the British public should put their money and invest in shares in the Natwest group all while they continue to hide the facts, to hide the information, to hide the truth about me. This debanking row is far from over, and I still reserve the right to take legal action.”
An independent review by law firm Travers Smith found in December that account closures at Coutts were in line with industry standards and showed “no evidence of discrimination due to political views”, but flagged “deficiencies” in its communication on the issue.
Neither Natwest chief executive Paul Thwaite nor Haythornthwaite directly mentioned “debanking” at the AGM, although the latter said 2023 had “brought unexpected challenges for the bank”.