NatWest Group PLC buys back £1.1bn of shares from the government

PLC () has bought back almost 600mln of its shares from the government at a cost of around £1.13bn.

The sale and purchase reduces the UK taxpayers’ stake in the bank to 59.8% from 61.7% previously.

The price of the deal was 190.5p, the closing price in London last night.

NatWest has the authority to buy shares from the Treasury under the terms of a Directed Buyback Contract that was renewed at last year’s AGM in April.

The bank said it intends to cancel 390.7mln or two-thirds of the shares acquired with the remaining 200mln to be held as treasury shares to give flexibility in areas such as employee share plans.

NatWest added that the purchase has also triggered a £500mln contribution into its main pension scheme.

After tax relief, this will reduce its net tangible equity by £365mln and its CET1 eligible assets by a net £99mln.

Combined, the share purchase and pension contribution will reduce its main measure of financial health, the CET1 ratio, by 0.72% but will boost tangible equity per share by 1p per share.

The share purchase comes just days after NatWest was summoned by the UK’s financial regulator to face criminal charges relating to money laundering lapses between 2011 and 2016.

It is the first criminal prosecution under money regulations by the FCA and the first prosecution against a bank.

The UK government has been steadily reducing its stake in NatWest which has been at as high as 85% when as Royal Bank of Scotland it was rescued from collapse by the taxpayer following the financial crash of 2008.