The End of State Ownership in NatWest A Landmark Moment for UK Banking

The United Kingdom government has sold its remaining shares in NatWest, bringing 17 years of state ownership to a close. This marks the conclusion of one of the most defining episodes in British banking history following the £45 billion bailout during the 2008 financial crisis.

The privatisation of NatWest underscores the end of a long and challenging journey for the institution, formerly known as the Royal Bank of Scotland. While the government’s intervention averted an even greater economic calamity, the sale came at a significant financial loss to the taxpayer. Out of the £45 billion injected to rescue the bank, only £35 billion has been recovered, reflecting a £10 billion shortfall as shares consistently traded below the 502p purchase price paid during the crisis. Comparatively, the government’s intervention in Lloyds Banking Group resulted in a £900 million profit when privatisation there was completed in 2017.

The Treasury has insisted that the bailout was essential to preserving economic stability during a period of global financial turbulence. Chancellor Rachel Reeves remarked that the bailout had saved millions of savers and businesses from potentially catastrophic losses. She framed the return of NatWest to private ownership as a conclusion to a crucial period in modern UK financial history and a step towards the next phase of economic progress.

NatWest, under its former banner as RBS, became a poster child for the excess and mismanagement that characterised the banking sector before the crash. Under Fred Goodwin’s leadership, the bank pursued aggressive expansion, including the disastrous £49 billion acquisition of ABN Amro in 2007. This deal placed immense strain on RBS’s balance sheet just as the financial system faced global instability. Public criticism of Goodwin’s leadership and lavish spending further tainted the bank’s reputation, leading to the eventual stripping of his knighthood in 2012. At its peak, RBS was briefly the largest bank in the world by assets, valued at more than twice the size of the UK economy.

After its bailout, RBS underwent years of painful restructuring. Tens of thousands of jobs were cut, operations in nearly 50 countries were shut down, and its ambitions in investment banking were sharply curtailed. The rebranding of the group to NatWest in 2020 was a symbolic effort to distance the institution from the controversies of its past.

NatWest accelerated the government’s exit from ownership with large-scale share buybacks and dividends aimed at reducing the public holding. This gradual process has now concluded, leaving the bank fully privatised. Paul Thwaite, NatWest’s chief executive, described the moment as an opportunity to reflect on the lessons of the financial crisis while embracing the future with renewed focus and optimism.

With this sale, the United Kingdom has exited all its holdings in banks bailed out during the financial crisis, closing a tumultuous chapter in the nation’s economic narrative. NatWest’s journey from near-collapse to full privatisation offers an enduring case study on the consequences of state intervention, corporate governance failure, and financial recovery.