NatWest returns to private ownership for first time since 2008 rescue
The UK Government has sold its remaining shares in NatWest and confirmed a £10.5 billion loss since the bank was rescued by taxpayers during the 2008 financial crisis.
It means NatWest, which was previously called RBS, has returned to private ownership for the first time since it was bailed out.
The Treasury has been a stakeholder since the bank received almost £46 billion of funding in 2008 and 2009.
To date, £35 billion has been returned to the Exchequer through share sales, dividends and fees – meaning the sale has come at a £10.5 billion loss to taxpayers.
Milestone
The Government and bosses at NatWest said it was a significant milestone since the bailout which prevented the bank’s collapse.
Chancellor Rachel Reeves said: “Nearly two decades ago, the then-government stepped in to protect millions of savers and businesses from the consequences of the collapse of RBS.
“That was the right decision then to secure the economy and NatWest’s return to private ownership turns the page on a significant chapter in this country’s history.”
Chief executive Paul Thwaite said: “This is a significant moment for NatWest Group, for all those who work here and for the UK more widely.
“As we turn the page on the financial crisis, we can look to the future with confidence, without forgetting the lessons of the past.”
Rising share price
The Treasury has been gradually selling its shares since 2015, but the process has accelerated in the past year as it took advantage of the bank’s rising share price.
Rick Haythornthwaite, NatWest Group’s chairman, told the PA news agency: “Hopefully, this is a moment when we can consign the great financial crisis to the past.”
“It’s very difficult to overstate the importance of what the taxpayer did for the company and for the nation as a whole,” he said, stressing that it was a “rescue, not an investment”.
“There’s no doubt that the banking sector, the financial services sector as a whole, is much stronger than it was 17 years ago.
“The culture of the companies is fundamentally different … way different to the short-term gains that they used to be (focused on).”
The boss added that offloading the Government’s stake meant the business could “look to the future”.
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A reminder that the fundamental tenet of Tory austerity – that we had to cut spending to pay for the bank bailout – was false because the bailout was temporary and largely recoverable. The actual RBS loss works out at £10 per UK citizen per year over the 17 years, a fraction of the damage caused by the economic stagnation triggered by austerity that has left the average family £8,800 worse off than comparable countries according the Nuffield Foundation in 2022.
Also it should serve as a lesson that the “too big to fail” mantra of Brown et all was false. They intervened but left the banks with a freedom to continue looking after the banksters first and foremost. They cut interest rates to the bone but the main beneficiaries were big government and big corporates who could borrow for next to nothing. Ordinary consumers paid through the nose as ever. So mortgage rates dropped but only to drive up the selling price of houses rendering home ownership less accessible to the majority of prospective buyers. A fine mess indeed.
Presumably it also encouraged land banking, as hikes in land value dwarfed the tiny interest on loans used to buy the land, further pushing up prices as approved developments didn’t get built.
No doubt it did along with numerous other perverse behaviours which filled the coffers of the few while turning the screw tighter for most people trying to get on with their lives. Making paper profits from escalating land values – asset price inflation – is a lot easier than getting off one’s ar*e and actually creating saleable units. It creates more liquidity problems later on but these transient executives who shift around milking big salaries and bonuses don’t worry about that kind of detail.
And you have to wonder to what extent those actually setting the rates benefited from the consequences of keeping rates low. At the very least they all enjoyed watching the paper value of their main home increase.
£10.5 BILLION was LOST.
What could you do with that money!
It’s four weeks of state pension benefits.