Chancellor Jeremy Hunt’s plan to sell off NatWest shares ‘could cost taxpayers £28bn’

Jeremy Hunt’s bid to sell off the Government’s remaining stake in NatWest may end up losing taxpayers £28billion, according to a new analysis.

The Chancellor recently revived Margaret Thatcher’s ‘tell Sid’ campaign as he revealed plans to sell off state-owned shares in the bank to the public.

In his Autumn Statement last week, Mr Hunt announced he would ‘explore options’ for a retail offer as the Treasury looks to fully offload its stake in NatWest by 2026.

But an analysis by Hargreaves Lansdown warned of an ‘eye-watering loss’ to taxpayers if the Government’s stake – bought as part of the banking bailout during the financial crisis – is sold at the bank’s current share price of around 206p.

NatWest shares have lost a quarter of their value this year amid the ‘debanking’ scandal that forced the departure of Dame Alison Rose as chief executive.

Jeremy Hunt revived Margaret Thatcher’s ‘tell Sid’ campaign as he revealed ministers are mulling plans to sell off NatWest shares to the public

The Government currently owns a 38.69 per cent stake in NatWest after selling £1.26 billion worth of shares back to the firm in May, taking it down from around 41 per cent

The ‘Tell Sid’ advertising campaign in the 1980s encouraged people to buy shares in state-owned businesses – including British Gas – under Thatcher’s privatisation drive

Derren Nathan, head of equity at the investment group, told The Times: ‘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.

‘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.’

He added that an ‘eye-watering loss’ to taxpayers could still come despite the Government having benefited from some returns on its NatWest shares when dividend payments were resumed in 2018 after a 10-year pause.

NatWest figures suggest the Government has been paid £4.4 billion since 2018 in dividends, the newspaper reported.

Hargreaves Lansdown found 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.

The Government currently owns a 38.69 per cent stake in NatWest after selling £1.26 billion worth of shares back to the firm in May, taking it down from around 41 per cent.

Ministers have been gradually reducing the Government’s shareholding following the near £46 billion bailout of Royal Bank of Scotland during the 2008 financial crisis.

RBS rebranded to NatWest Group in 2020 under the leadership of Dame Alison, who recently quit over the ‘debanking’ scandal involving Nigel Farage.

As he unveiled the Treasury’s plans to MPs during the Autumn Statement, Mr Hunt told the House of Commons last week: ‘It’s time to get Sid investing again.’

The remark referred to the ‘Tell Sid’ advertising campaign in the 1980s, which encouraged people to buy shares in state-owned businesses – including British Gas – under Thatcher’s privatisation drive.

The Treasury said the Government planned to sell its final shares by 2025-26 ‘subject to market conditions and value for money’.

It added: ‘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.’

Source: Read Full Article