NatWest reveals £24m bill for shelved retail share sale as profits fall

NatWest has revealed it spent £24 million on shelved Tory government plans for a retail share sale in the bank as it also reported a 16% fall in half-year earnings.

The taxpayer-backed lender’s bill for the “Tell Sid”-style campaign comes after it was forced to pay for advertising and preparations for the share sale, which had been due to launch in the summer before the surprise July 4 General Election announcement.

The new Labour Government has not yet confirmed whether it plans to rekindle the share sale plans.

NatWest chief executive Paul Thwaite said he would expect any announcement about a potential share sale to come in the Government’s next fiscal event, although he stressed it was a decision to be made by the Treasury.

He said: “The reality is that the policy for any retail share sale is usually set out during fiscal events.

“The new government hasn’t had one.

“We would expect it to follow in the next fiscal event.”

Details of the costs were revealed in NatWest’s first half figures showing a 16% fall in pre-tax operating profits to £3 billion for the six months to June 30, although this was better than feared and the bank upgraded some of its key performance measures for the year.

NatWest also announced it had agreed to buy around £2.5 billion worth of residential mortgages from Metro Bank for £2.4 billion in cash, which will see it add around 10,000 borrowers to the group.

It follows NatWest’s move to buy the bulk of Sainsbury’s banking business in June, adding around £1.4 billion of unsecured personal loans, £1.1 billion of credit card balances and about £2.6 billion of customer deposits.

Shares in the bank lifted 8% in Friday morning trading.

Mr Thwaite said NatWest’s customers were “beginning to feel more confident”, with lending activity increasing and savings deposits up by £1.5 billion or 0.8% in the second quarter.

But the group saw its mortgage balance drop by £700 million in the second quarter, as redemptions – or mortgages paid off – more than offset stronger new lending.

It also released £45 million of the cash it has previously set aside for bad debts in the second quarter, taking its total impairment charge to £48 million in the first half, down from £223 million a year ago.Many households are starting to feel more positive about their finances

Many households are starting to feel more positive about their finances

Mr Thwaite said: “With inflation falling and employment remaining high, customer confidence continues to rise.

“Many households are starting to feel more positive about their finances.”

NatWest has seen the taxpayer stake in the group drop to below 20% in recent weeks, down from around 38% in December, as the Government continues to sell down its shareholding.

The bank – formerly known as Royal Bank of Scotland – was at one stage 84% owned by the State after a mammoth £46 billion bailout at the height of the financial crisis.

But the Treasury has been selling down its stake in the lender, which also owns Coutts, as part of aims to return it fully to private hands.

As part of this, the former Tory government had announced plans to sell some of the stake to retail investors, in a similar share offering to the 1986 British Gas “Tell Sid” campaign to promote the sale of stock to the public after it was privatised.

It is understood that some of the £24 million forked out by NatWest for marketing costs of the retail share plan can be re-used for general advertising uses, although the bill also covers legal fees and expenses.