According to the latest financial analysis only if the government offers NatWest shares at a loss to the taxpayer of £28bn.

But this government might be tempted to try anything to stay in power, or is Owl being too cynical? 

NatWest sale ‘could cost taxpayers £28bn’

George Grylls, Ben Martin www.thetimes.co.uk

The government may end up losing £28 billion from selling its shares in NatWest, a financial analysis has shown.

Jeremy Hunt announced last week that the government would explore options to sell its remaining 38.6 per cent stake in the bank, potentially offering the public the opportunity to buy shares. The chancellor said it was “time to get Sid investing again”, a reference to the 1980s advertising campaign during the privatisation of state-owned assets such as British Gas.

The government bailed out the Royal Bank of Scotland, which subsequently rebranded as the NatWest Group, purchasing an 84.4 per cent stake for £45.5 billion between 2008 and 2009 during the financial crisis.

Ministers have been reducing the government’s stake in the bank since 2015, but all of these sales have been at a loss. Financial analysts have questioned the decision to examine ways to expedite the sale of the remaining stake at a time when NatWest is struggling.

The bank has lost a quarter of its value this year after the former chief executive, Dame Alison Rose, was forced to resign over the debanking scandal involving Nigel Farage, the former Ukip leader, and Coutts, the private bank owned by NatWest.

Analysis by Hargreaves Lansdown, the investment firm, has shown that selling the government’s remaining stake at the bank’s current share price of 206p would lead to a total cost of £28 billion to the taxpayer.

The government has benefited from some returns on its NatWest shares when dividend payments were resumed in 2018 after a ten-year pause. NatWest figures suggest that the government has been paid £4.4 billion since 2018 in dividends. The bank has paid out a total of 70.8p per share in ordinary and special dividends, amounting to only 14.2 per cent of the buy-in price, according to Hargreaves Lansdown.

Derren Nathan, head of equity at the investment group, said that despite those modest returns the taxpayer was still facing an “eye-watering loss”.

“It needs to be said that gain on investment wasn’t the main motivation for the initial bailout, as this was seen as essential for the nation’s financial stability,” he said. “But given where we are in the cycle the timing of a disposal may be somewhat questionable. Based on forward earnings the valuation is close to a ten-year low.

“There are of course still potential economic tripwires ahead, but so far a much-anticipated recession has been avoided and there’s still a chance the landing in the UK will be on the softer side. Meanwhile NatWest is poised to benefit from some of the structural tailwinds that should lift sector earnings over the medium term.”

The Treasury said the government planned to sell its final shares by 2025-26 “subject to market conditions and value for money”. It said: “As part of the plan to return [NatWest Group] to the private sector, the government will also explore options to launch a share sale to retail investors in the next 12 months, subject to supportive market conditions and achieving value for money.”

NatWest Group said: “Any decisions around share sales are a matter for the government. We welcome the government’s continued commitment to returning NatWest Group to private ownership and believe this is in the best interests of the bank and our shareholders.”