NatWest has agreed to buy back £1.26bn of its shares from the government, which rescued the lender in a £45.8bn bailout 15 years ago. 

The Treasury says the move reduces the taxpayer’s stake in the bank to 38.6% from 41.4%, bringing “NatWest a step closer to being returned to full private ownership”. 

The bank will buy just over 469 million shares at 268.4p each, Friday’s closing market price. The purchase is expected to be completed on Wednesday.

Economic secretary to the Treasury, Andrew Griffith says: “Today’s sale is another major milestone in returning NatWest to full private ownership as promised.  

“The government has now sold well over half of its shareholding.” 

NatWest chief executive Alison Rose adds: “This transaction reduces government ownership below 40% and demonstrates positive progress on the bank’s strategic priorities and the path to privatisation.  

“NatWest Group’s robust balance sheet and capital generation allow us to continue lending responsibly and supporting the customers and communities we serve whilst delivering sustainable returns to our shareholders, including the government.” 

However, the directed buyback sale represents a further loss for the taxpayer, after the government bought around 84% of the bank at 502p per share at the height of the 2008 global financial crisis, saving it from collapse. 

The lender, which has a market capitalisation of £25.7bn, has tended to trade at around half the value of its bailout. 

In the March Spring Budget, the government said it planned to sell off its shares in the bank by 2026, “subject to market conditions and achieving value for money for taxpayers”.   

The bank returned to majority private ownership in March 2022 after a similar block sale by the government. 

Lloyds Banking Group, which bought stricken rival HBOS in a government-arranged rescue in 2008, was also handed a £20.3bn bailout, which was paid back in 2017.