NatWest Group — the bank formerly known as RBS — has agreed to buy £1.26 billion worth of its shares back from the UK government as it moves closer towards private ownership 15 years after it was bailed out for £45.5 billion during the global financial crisis.

The deal will reduce the UK government’s voting rights in the former Royal Bank of Scotland to 38.69% from around 41.4%.

“This transaction reduces government ownership below 40% and demonstrates positive progress on the bank’s strategic priorities and the path to privatization,” said NatWest CEO Alison Rose in a statement.

NatWest said in a stock exchange statement: “NatWest Group plc has agreed with HM Treasury to make an off-market purchase of 469,200,081 ordinary shares in the company … at a price of 268.4 pence per ordinary share, being the closing price of the ordinary shares on the London Stock Exchange on 19 May 2023.  

“The total consideration for the off-market purchase will be £1,259,333,017.40.

“The purchased ordinary shares represent 4.95 per cent of the company’s issued ordinary share capital (excluding treasury shares) …

“The company intends to cancel 336,200,081 of the purchased ordinary shares and hold the remaining 133,000,000 ordinary shares in treasury.

“Holding ordinary shares as treasury shares gives the company the ability to cancel or re-issue such ordinary shares at a later date, quickly and cost effectively, and may provide the company with additional flexibility in the management of its capital base, including the allotment of ordinary shares in relation to its employee share plans …”

On settlement of the transaction, NatWest will hold 217.56 million of its ordinary shares as treasury shares.