NatWest Group is braced for the government to further delay its target date for returning the lender to full ownership, raising the prospect that it could face almost 20 years as a partially nationalised company.
Sky News understands that the Treasury is likely to confirm alongside Rishi Sunak‘s Budget next week that its ambition of selling its remaining 60% stake in NatWest – formerly Royal Bank of Scotland – is to be pushed back again.
People close to the bank said they expected the privatisation timetable to be extended by a further one or two years, reflecting the fact that the government has not sold any shares in the bank since 2018.
An additional two-year delay would raise the prospect of NatWest having been part-owned by taxpayers for almost two decades before the state is finally removed from its share register.
Volatile markets and the coronavirus pandemic have impaired any hope of selling down the stake during the last two-and-a-half years.
The government injected £45.5bn into RBS, as it was then called, in 2008 to prevent its outright collapse during the global financial crisis.
The five years after, which were overseen by Stephen Hester, the bank’s chief executive, largely involved attempting to stabilise it, reduce its exposure to investment banking and contend with a series of crises such as the Libor rate-rigging scandal.
Alison Rose, NatWest’s new boss, has announced plans to pare back its investment banking activities and take a further axe to costs.
Earlier this month, it reported a £350m full-year loss, largely as a result of higher impairment provisions because of the COVID-19 crisis.
It also announced plans to pull out of the Irish banking market.
Ministers have always insisted that disposals of NatWest shares would be subject to value-for-money considerations and market conditions.
The most recent sale in June 2018, which involved 7.7% of RBS, was undertaken at a price of 271p-a-share.
On Friday afternoon, shares in NatWest were trading at about 183p, giving the bank a market value of £22.4bn.
The Treasury did not respond to a request for comment, while NatWest declined to comment.