NatWest Group plc (the “Company” or “NWG”) has agreed with HM Treasury to make an off-market purchase (the “Off-Market Purchase”) of 549,851,147 ordinary shares in the Company with a nominal value of £1 each (“Ordinary Shares”) at a price of 220.5 pence per Ordinary Share, being the closing price of the Ordinary Shares on the London Stock Exchange on 25 March 2022. The total consideration for the Off-Market Purchase will be £1,212,421,779.
The purchased Ordinary Shares represent 4.91 per cent of the Company’s issued share capital (excluding treasury shares). The Off-Market Purchase is expected to settle on 30 March 2022.
A contract (the “Directed Buyback Contract”) between the Company and HM Treasury was approved by the shareholders of the Company at a General Meeting held on 6 February 2019 and signed on 7 February 2019. The authority from shareholders to make off-market purchases of Ordinary Shares from HM Treasury (or its nominee) under the terms of the Directed Buyback Contract was renewed at the Annual General Meeting on 28 April 2021.
Commenting on this announcement, CEO Alison Rose, said:
“We believe this transaction to be a good use of capital for the bank and our shareholders. Reducing government ownership below 50% is an important milestone for NatWest Group and a further demonstration of the progress we are making as we continue to deliver for our customers and shareholders.
“We are proud of the role we play in supporting our 19 million customers throughout the UK, including one in four businesses. By delivering on our strategic priorities, and by forging closer and deeper relationships with our customers at every stage of their lives, we will help them to grow and to thrive. Because if they thrive, and if the UK economy thrives, so will we.”
NWG intends to cancel all of the purchased Ordinary Shares.
Under chapter 11 of the Listing Rules, the Directed Buyback Contract constitutes a related party transaction. However, the Off-Market Purchase is treated as a smaller related party transaction under LR 11.1.10 R.
Following settlement of the above transaction:
NWG will hold 146,116,846 of its Ordinary Shares as treasury shares;
NWG will have in issue 10,650,979,374 Ordinary Shares (excluding treasury shares); 483,140 Cumulative Preference Shares of £1; and 10,130 Category II Non-cumulative Preference Shares of US$0.01 in issue; and
HM Treasury will hold approximately 48.06 per cent. of the Company’s voting rights.
Based on NWG’s proforma position on 1 January 2022, NWG’s CET1 ratio of 15.9 per cent will be reduced by 69 basis points (31 December 2021 77 basis points) and tangible equity per share will increase to 275 pence.
Contribution to the main pension scheme
The Off-Market Purchase of Ordinary Shares has triggered NWG to pay £427 million to its main pension scheme in line with the memorandum of understanding announced on 17 April 2018. CET1 is not impacted as this charge was accrued as part of the FY 2021 results.
1 This number does not take into account any purchases of Ordinary Shares which (i) may have taken place but have not, at the date of this announcement, settled under NWG’s On Market Share Buy back Programme which commenced on 21 February 2022 (the “Programme”) or (ii) may take place under the Programme between the date of this announcement and settlement of the Off-Market Purchase.