NatWest share offer: all you need to know
Find out everything you need to know about the company and the upcoming sale of its shares to retail investors.
Who is NatWest?
NatWest Group PLC, formerly known as the Royal Bank of Scotland Group (RBS) and renamed in July 2020, is one of the financial services providers that was rescued by the UK government following the 2008 – 2009 banking crisis.
What is the NatWest share offer?
In line with its objective to return NWG to full private ownership by 2025/2026, the UK government will be offloading a portion of its stake in the company through a process known as a share offer. The offer will enable retail investors in the UK to buy NWG shares from the government, most likely at a discounted price.
Why is the government selling NatWest shares?
During the global financial crisis of 2007 – 2009, the government spent £137 billion in public money on aid for the UK banking sector. In addition to supporting NatWest (then RBS) and Lloyds Banking Group (Lloyds), the government took full ownership of two other organisations, namely Northern Rock and Bradford & Bingley.
By December 2009, the government held a stake of 84% in NWG. However, in order to return ownership of the company to the private sector, there have been cycles of share sales – in 2015 and every year since 2018. In March 2024, it was announced that the government was no longer the controlling shareholder in NWG, as its total stake in the company had fallen below 30%.1
In each sale cycle, the price of the shares has been much lower than what the government paid during its bank rescue. The limited movement in the price of the shares coupled with the costs associated with holding them seem to suggest that the state will sell at a loss again this year.
In the 15 years prior to the financial crisis, RBS/NWG had experienced tremendous growth.
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What happened when the government sold Lloyds shares?
As part of its 2008/2009 bank rescue package, the UK government acquired a 43% shareholding in Lloyds. UK Financial Investments (UKFI) later assisted the state in disposing of its shareholding. To do so, the company developed a trading plan which was designed to drip-feed the shares back into the free market rather than selling them in large blocks. It engaged the services of Morgan Stanley to help implement the plan, which was completed in March 2017.2
UKFI’s strategy appeared to have garnered a £900 million profit for the government. However, this figure was misleading, as it didn’t take the costs of holding the shares into account. Once costs were factored in, it was determined that the government had actually suffered losses of £3.2 billion from its Lloyds bailout.3
In October 2015, the government had planned to sell some of its Lloyds shares to retail investors at a discounted price. However, a year later, the Tories had to abandon the plan due to the decline in the Lloyds share price.
Lloyds shares since returning to private ownership
In the last 12 months, the Lloyds share price has remained relatively stable – ranging between 39.76p and 52.38p4 – and ultimately risen by almost 9% over the period. However, on the whole, it has declined in the seven years since the company was fully returned to private ownership.
When will the NatWest share offer take place?
When presenting the Spring Budget on 6 March 2024, Chancellor Jeremy Hunt announced that the government was planning to sell another portion of its shareholding in NWG later this year. The offer is subject to market conditions and the ability to create value for money for taxpayers. He suggested that the sale to retail investors could take place as early as this summer.
NatWest’s business model
NWG consists of several brands and focuses on three main pillars: retail banking, commercial and institutional banking, and private banking.5
NWG brands
As mentioned above, the group consists of several brands, the main ones being:
- NatWest
- Royal Bank of Scotland
- Ulster Bank
- Coutts & Co
- Holt’s Military Banking
- Lombard
- RBS International
Retail banking
The retail banking pillar focuses on private customers and their savings and financing needs.
How does NWG make money from retail banking?
- Interest income
- Interest on deposits
- Fee income (account maintenance fees, overdraft fees, ATM fees, late payment fees on credit cards)
- Credit card revenue
- Wealth management products
- Insurance products
Commercial and institutional banking
To address common issues relating to interest rates and inflationary pressures, this pillar was combined with NatWest Markets and RBS International in 2022 to leverage the expertise of each.
How does NWG make money from commercial and institutional banking?
- Interest and fee income from loans
- Deposit and treasury services
- Trade finance and foreign exchange
- Capital markets and advisory services
Private banking
Coutts & Co caters to high-net-worth British individuals, offering them banking, lending and wealth management solutions. It’s also the first certified B Corp private bank in the UK, meaning it adheres to set corporate social responsibility (CSR) standards.
How does NWG make money from private banking?
- Wealth management services
- Private banking products
- Trust and fiduciary services
NatWest’s competitors
NWG’s main competitors are leading players in the financial services industry in the UK. These companies offer retail or commercial banking, while their specific product offering varies. They either focus on the local UK market or operate internationally.
Competitors are:
- HSBC
- Barclays
- Lloyds Banking Group
- TSB
These competitors vary in terms of their revenue, with HSBC being the highest earner thanks to its global operations and expansive product range. Revenue and net income considered, the second most relevant competitor is Barclays, the third is Lloyds Banking Group and the last is TSB.
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2 |
Source: UK Government Investments, 2017 |
3 |
Source: House of Commons Library, 2018 |
4 |
Data taken from the official Lloyds website as at 3 April 2024. |
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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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