Ownership of lender NatWest crossed an important threshold, as the UK government early Monday said it has reduced its stake below 50%, more than a decade after a taxpayer bailout during the financial crisis.
The Treasury said it sold just under 550 million shares back to NatWest in an off-market transaction at 220.5 pence per share, netting £1.21 billion.
NatWest shares were up 1.8% at 224.40p early Monday.
NatWest will cancel the share that were purchased. After this, the government’s stake will be 48.1%, falling from 50.6%.
The Treasury noted that its percentage stake could rise again due to NatWest’s share buyback programme, but said any such increases will be offset by the sale of shares under the trading plan managed by Morgan Stanley.
Goldman Sachs is acting as privatisation adviser for the Treasury.
The UK government first began building its majority stake in the bank from October 2008 during the financial crisis as it looked to inject funds into the banking system. As a result, the government ended up holding an 81% stake in the lender - called Royal Bank of Scotland Group at the time - after a hefty £45.5 billion taxpayer bailout.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.3% at 7,504.63
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Hang Seng: up 1.3% at 21,680.78
Nikkei 225: closed down 0.7% at 27,943.89
S&P/ASX 200: closed up 0.1% at 7,412.40
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DJIA: closed up 153.30 points, 0.4% at 34,861.24
S&P 500: closed up 0.5% at 4,543.06
Nasdaq Composite: closed down 0.2% at 14,169.30
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EUR: down at $1.0962 ($1.0987)
GBP: down at $1.3148 ($1.3185)
USD: up at JP¥123.14 (JP¥122.06)
GOLD: down at $1,934.97 per ounce ($1,955.60)
OIL (Brent): down at $116.04 a barrel ($120.08)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday’s key economic events still to come
1100 BST Ireland retail sales index
1200 BST UK BoE Governor Bailey speaks at Bruegel event
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Russia and Ukraine will restart face-to-face peace negotiations on Monday, amid warnings that the situation in the besieged city of Mariupol was now ‘catastrophic’. President Volodymyr Zelensky hailed the resumption of over-the-table talks, saying they must bring peace ‘without delay’ and signalling a willingness to compromise on the most sensitive topics. The two sides have not met in person in weeks, but will hold three days of talks in Istanbul from Monday, according to David Arakhamia, a Ukrainian negotiator, lawmaker and Zelensky ally. Several rounds of talks have already failed to end the war sparked by the Russian invasion, which is now in its second month. About 20,000 people have been killed, according to Zelensky, 10 million have fled their homes and despite Russian military setbacks, several cities are still coming under withering bombardment. In the southern port city of Mariupol, about 170,000 civilians are encircled by Russian forces, with ever-dwindling supplies of food, water and medicine. Zelensky had previously indicated he is ‘carefully’ considering a Russian demand of Ukrainian ‘neutrality’ and indicated he was willing to negotiate the future of Donbas at a later date.
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BROKER RATING CHANGES
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UBS RAISES AVIVA TO ’BUY’ (NEUTRAL) - PRICE TARGET 480 (460) PENCE
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COMPANIES - FTSE 100
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National Grid agreed a deal to sell a majority stake in its UK gas transmission and metering business. National Grid said it will receive £2.2 billion from the sale of a 60% interest in the business. It will sell the holding to a consortium of ‘long-term infrastructure investors’. The consortium includes Macquarie Asset Management and British Columbia Investment Management. The deal implies an enterprise value of £9.6 billion for the unit, which National Grid calls NGG. National Grid also will receive about £2.0 billion from additional debt financing at completion of the deal. It has entered into an option agreement with the consortium of investors for the potential sale of the remaining 40%. The option may be exercised by the consortium during the first half of 2023. London-listed infrastructure investment fund Pantheon Infrastructure said it has agreed to invest roughly £40 million alongside the consortium.
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Barclays warned of a £450 million hit, due to the over-issuance of structured notes and exchange traded notes. The bank said securities issued as part of its US shelf registration statement during a period of roughly one-year exceeded the registered amount. Some purchasers now have a right of rescission, which would require Barclays to buy back the instruments at the original purchase price. Barclays expects rescission losses of £450 million, net of tax. The charges will be reflected in its first quarter earnings. It also means its £1 billion buyback will now kick off in the second quarter. ‘Barclays Bank PLC intends to file a new automatic shelf registration statement with the [US Securities & Exchange Commission] as soon as practicable. Barclays remains committed to its structured products business in the US,’ the company said.
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Drug maker AstraZeneca said its Evusheld antibody combination for the prevention of Covid-19 has been approved in the EU for use ‘in a broad population’. It is now approved for use in adults and adolescents aged 12 years and older weighing at least 40 kilogrammes. Primary analysis from a phase III probe showed the drug demonstrated a 77% reduction in the risk of developing symptomatic Covid-19, compared to a placebo. Six-month median analysis showed an 83% reduction.
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COMPANIES - FTSE 250
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Auto distributor and retailer Inchcape said it has added first-time distribution relationships with Porsche and Volvo, while it has broadened its coverage with Jaguar Land Rover to 12 markets, up from 8. Inchcape has secured the new and expanded relationships through the majority buy of Ditec, which is the distributor of Porsche, Volvo and Jaguar Land Rover in Chile. It has acquired a 70% stake. ‘Ditec will add £130 million of annualised revenue to the Americas & Africa region, the group’s fastest growing region, with pro-forma revenue of £1.3 billion, which has grown both organically and by acquisition from £300m in 2016,’ Inchcape said.
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COMPANIES - MAIN MARKET AND AIM
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Fashion retailer Ted Baker confirmed it received, and rejected, two unsolicited, non-binding takeover proposals from Sycamore Partners Management. The first offer was for 130 pence per share on March 18, with a second coming four days later at 137.5p per share. Ted Baker’s stock closed at 125.81p on Friday, giving the retailer a market capitalisation of £232.3 million. Ted Baker rebuffed both offers. ‘The board of Ted Baker carefully reviewed both of Sycamore’s proposals with its advisers and concluded they significantly undervalued Ted Baker and failed to compensate shareholders for the significant upside that can be delivered by Ted Baker as a listed company. Ted Baker is a leading global brand with a strong future. The management actions taken over the last two years have put the business on a firm footing, and it is now well on the way to recovery following a turbulent period. The board is focused on delivering value for Ted Baker’s shareholders well in excess of the price offered by Sycamore,’ the company said.
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Monday’s shareholder meetings
Congyar Investment Co PLC - GM re share premium account cancellation
Go-Ahead Group PLC - GM re accounts, remuneration, auditor
Jupiter Emerging & Frontier Income Trust PLC - AGM
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