The Government will lose almost £40billion on its 2008 bailout of Natwest after the coronavirus crisis pushed down the share price.
Treasury ministers have vowed to offload the taxpayer’s stake in the bank, formerly known as RBS, by 2024-25, the Government’s Budget watchdog revealed this week.
But the banking sector is reeling from the economic damage caused by the pandemic, and lenders’ share prices have tumbled.
Treasury ministers have vowed to offload the taxpayer’s stake in Natwest bank, formerly known as RBS, by 2024-25, the Government’s Budget watchdog revealed this week
Natwest’s shares have plunged by 34 per centthis year so far, meaning the taxpayer will get back even less than initially thought when the Government finally sells its stake.
In its Economic and Fiscal Outlook this week, the Office for Budget Responsibility (OBR) said it was told by the Treasury the Government intends to ‘fully dispose of its RBS shareholding’ by 2024-25.
But at current rates, the OBR thinks the sale of the Government’s 62 per cent stake in Natwest will generate just £11.2billion. This is £6.9billion less than the OBR was forecasting in March.
Natwest boss Alison Rose has been trying to polish up the bank’s image which was tarnished during the financial crisis
Added to small Natwest share sales the Government completed in 2015 and 2018, and small payments received across other schemes, this means the Treasury will get back just £17.5billion from its £45.8billion bailout of Natwest – crystallising a £28.3billion loss.
But this does not take into account how much it cost the Treasury to finance its £45.8billion bailout of Natwest through the gilt market at the height of the financial crisis.
Including this number, along with small fee payments received from Natwest for other matters, the actual loss to the taxpayer is £38.6billion.
Some of the losses will be recouped through dividends, as Natwest has already handed out £2billion to the Treasury between 2018 and 2019.
Andy Agathangelou, founder of the Transparency Task Force, said: ‘It’s atrocious that not only has the taxpayer had to fork out in paying for the bank to be bailed out, they are still paying the price.’
Natwest shares are trading at 160.15p – a fraction of the 502p which the Government paid in the 2008 rescue deal.
Natwest has been unable to pay any dividends to shareholders this year after the Bank of England’s watchdog told lenders to hold on to as much money as possible. Under boss Alison Rose Natwest has been trying to polish up its image which was tarnished during the financial crisis.