The Conservative government spent around £10m exploring a now-scrapped plan to sell part of its stake in Natwest to retail investors, with the bank footing most of the bill, City A.M. can reveal.
The sum includes lucrative fees paid to big banks, marketing firms and PR agencies, with some hired to advise more generally on selling the shareholding, including the retail offer, and others specifically to support delivery of the “Tell Sid”-style scheme.
Chancellor Rachel Reeves announced last Monday that the new Labour government would not go ahead with plans to offer the Treasury’s shares in Natwest to the general public, flagging “significant discounts that could cost taxpayers hundreds of millions of pounds”.
The government is the biggest single shareholder in Natwest. It first took an 84 per cent stake in the FTSE 100 bank to rescue it during the financial crisis in 2008, gradually offloading shares to hold a stake of just under 19 per cent today, worth roughly £5.3bn.
Reeves’ predecessor, Jeremy Hunt, first announced plans to explore a retail offer last November, with the government since directly engaging with 16 companies to advise on the process, according to data provided to City A.M. in response to a Freedom of Information request.
These include law firm Freshfields Bruckhaus Deringer, while banks Goldman Sachs and Barclays acted as a “privatisation adviser” and “retail coordinator” respectively. Rothschild & Co was also hired as an independent capital markets adviser.
Advertising group M&C Saatchi was hired to assist with “creative” tasks, including website copy and design. The firm landed a £2m contract in March to work on the possible sale.
Communications firms Lexington and Teneo were brought in to handle PR for the offer, winning a £390,000 contract in February. Market research giant Ipsos Mori helped with “campaign tracking”.
Australian firm Computershare, which provides a stock transfer platform, was due to be a “receiving agent” in the planned sale.
Other contracts show £200,000 awarded to Mindshare Media for “media planning services” and £110,050 for market research from Walnut Unlimited.
Other notable spending included staffing costs for the Treasury and UK Government Investments (UKGI), which advises on government corporate finance. The Treasury did not provide a figure.
Roughly £450,000 was spent on “temporary resources” procured by UKGI to support the project.
In its half-year results last month, Natwest revealed it had spent £24m on the scrapped plans, including advertising. A person familiar with the matter said this figure includes expenses that the Treasury and UKGI is recovering from Natwest.
Under a Resale Rights Agreement between Natwest and the Treasury, tied to the government’s initial rescue of the bank, Natwest is expected to refund all expenses associated with the retail offer except UKGI and HMT staffing costs.
It is understood that the bank expects to reuse some of the £24m for general advertising uses, but the bill also covers legal expenses.
The Treasury and Conservatives did not respond to requests for comment on the level of spending.
Natwest declined to comment on the government’s expenditure. Speaking after its latest results announcement, chief executive Paul Thwaite said the £24m “reflected simply the normal costs you’d expect in preparation for any sort of public offer”.