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Canny NatWest sale can limit UK taxpayer losses

2 minute read

RBS CEO Alison Rose attends the annual CBI Conference in London, Britain November 18, 2019.

LONDON, July 22 (Reuters Breakingviews) - Shrewd timing could limit taxpayer losses on state-owned NatWest (NWG.L). On Thursday, the UK government announced a plan to further lower its 55% stake in the lender formerly known as Royal Bank of Scotland. Rather than offloading a defined chunk, however, the government has given Morgan Stanley (MS.N) the right to sell the equivalent of 15% of total trading volume in the stock for a year beginning in mid-August.

At the current price of 197 pence, any sales would crystallise hefty losses compared to the average 502 pence per share the government paid to rescue the lender in 2008. Still, the timing is good. Analysts expect the bank run by Alison Rose to make a 5.6% return on tangible equity this year, roughly half of the expected return for Lloyds Banking Group (LLOY.L). Yet NatWest shares trade at 75% of tangible book value per share, only a bit below its larger rival. Taxpayers could get a better deal than feared. (By Christopher Thompson)

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Editing by Peter Thal Larsen and Oliver Taslic

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