31st May 2024 15:06
(Alliance News) - NatWest Group PLC bought back just over GBP1.2 billion of its own shares from the UK government, both sides said on Friday, with the state's ownership in the lender falling to just under 23%.
The Treasury sold 392.4 million shares, a 4.5% stake, back to NatWest at 316.2p each, and as a result the government's stake will be cut to 22.50% from 25.98%.
NatWest shares were flat at 316.20 pence each in London on Friday afternoon for a GBP27.58 billion market capitalisation.
NatWest said it plans to cancel 222.4 million of the shares and hold the remainder in treasury. The new percentage holding for the UK government takes into account this cancellation of most the shares and retention in treasury of the remainder.
NatWest separately said on Friday that the UK government had sold 84.1 million shares since mid-May as part of its ongoing trading plan, reducing its stake to the 25.98% from 26.95%.
Edinburgh-based NatWest was nationalised in 2008 and 2009, with several multibillion-pound bailouts leaving the UK taxpayer with an 84% stake in the company, which at the time was known as the RBS Group. The government since has been progressively reducing its stake by means of market sales and buybacks by NatWest.
UK Chancellor Jeremy Hunt recently revealed plans to start selling the government's remaining stake to retail investors starting as early as this summer, but this plan was put in doubt by the calling of a general election for July 4.
"Prior to today's announcement, we had assumed a GBP1.1 billion directed buy back for 2024. We view the larger size as a positive, perhaps especially as the parliamentary elections scheduled for 4th July could delay the retail offer," Peel Hunt analysts commented.
"Our estimate for total buybacks in 2024 is GBP1.4 billion (including an on-market buy back of GBP300 million) plus dividends of GBP1.34 billion, amounting to GBP2.74 billion in total capital returns for 2024, a decrease from 2023 due to a smaller surplus capital in the balance sheet at the start of the year. This estimate now appears conservative and is supported by the 1Q results, which indicate that capital generation within the group remains strong. Generally, we view the progressive elimination of the UK government's holding as positive for the rating of the shares."
NatWest said the share buyback will be broadly neutral for tangible net value. It continues to target a CET1 ratio, a measure of financial strength, of 13% to 14%.
By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Natwest