UK treasury expected to push back sale of its RBS stake to 2025

Written by Ruby Hinchliffe
12th March 2020

The government is expected to announce this week that it is pushing back the date for selling its stake in the Royal Bank of Scotland (RBS) – now re-branded to NatWest Group – to at least 2025.

According to a Sky News source, the reduction of the 62% stake held by the state in the bank will see a further five-year delay due to “turbulent stock markets”.

On Wednesday morning, RBS was trading at roughly 143p per share

The government has not sold any of its RBS shares since June 2018, which is why Sky’s source “close to the bank” is not surprised.

The bank’s value has been slipping since the Brexit referendum in 2016, and more recently, it has fallen due to the coronavirus outbreak and the breakdown of talks between Russian and the Organisation of Petroleum Exporting Countries (Opec) pushing oil prices down.

On Wednesday morning, RBS was trading at roughly 143p per share.

But with the government’s announcement that interest rates are getting cut from 0.75% to 0.25%, it’s unlikely that the bank’s profitability will continue to shoot up.

Its profits in 2019 went up to £3.1 billion in 2019, nearly double the £1.6 billion it brought in the year before.

Under new CEO Alison Rose, the bank is further reducing some of the risk its investment arm holds and reducing its risk-weighted assets from £38 billion to roughly £20 billion.

Along with structural changes, the bank has also seen a flurry of executive departures. These include challenger bank Bó’s CEO Mark Bailie, who was replaced by Marieke Flament, the CEO of the bank’s business challenger bank Mettle.

CEO of RBS’s retail bank Les Matheson announced his departure in October, and in December the departures of Chris Marks, the CEO of NatWest Markets, and finance chief Richard Place were announced. The group’s chairman Sir Howard Davies is also set to leave.

Amid the recent coronavirus outbreak, the bank has also taken the decision to commit a £5 billion fund to help prop up small and medium-sized businesses.

Along with this, it has also allowed those customers impacted most by the virus to defer mortgage payments for up to three months as the number of cases climb to 373 in the UK at the time of writing.