UK government no longer NatWest’s controlling shareholder; Swift plans launch of CBDC platform

The decline in government ownership, from over 45 per cent in late 2022 to 29.8 per cent currently, follows consistent daily sales and a £1.3bn buyback in May last year. At the outset of 2024, the government held just under 38 per cent of the bank.

Dropping below the 30 per cent threshold relieves the government of its designation as a controlling shareholder under the UK’s listing rules, thereby freeing the bank from certain regulatory requirements, such as the need for double voting on director appointments.

In preparation for further reduction in government ownership, NatWest sought shareholder approval last week to increase its stock buyback limit from just under 5 per cent to 15 per cent annually.

During his recent Spring Budget announcement, UK chancellor Jeremy Hunt reiterated the government’s intention to return NatWest to private ownership by 2026, including plans for a public share sale this summer aimed at engaging retail investors.

In a statement, NatWest said: “We welcome the government’s continued commitment to returning NatWest Group to private ownership. With the government shareholding now below 30 per cent, we have been pleased with the recent momentum to achieving this shared ambition, which we believe is in the best interests of the bank and our shareholders.”

—

The timing of the platform’s launch is expected to coincide with the roll-out of major CBDCs. According to research from the Bank of International Settlements, around 90 per cent of the world’s central banks are exploring digital versions of their currencies, spurred by the rise of cryptocurrencies like bitcoin, although they continue to face technical challenges.

According to a press statement, a recent six-month trial led by Swift and involving a diverse group of 38 central banks, commercial banks and settlement platforms was one of the largest collaborations on CBDCs and tokenised assets to date. HSBC, Citi, Deutsche Bank, Société Générale and Standard Chartered were among the banks that participated. 

The trial aimed to ensure interoperability among various countries’ CBDCs, regardless of their underlying technologies, with the goal of mitigating payment system fragmentation risks. Moreover, Swift says it demonstrated the potential for using CBDCs in complex cross-border transactions, potentially streamlining processes and reducing costs.

In an interview with Reuters, Swift’s head of innovation, Nick Kerigan, noted that the trial’s success has paved the way for Swift to develop a roadmap towards developing its concept into a working version of the platform within the next 12 to 24 months. However, the timeline remains subject to potential delays in major CBDC launches.

—

Stuart Alderoty, Ripple’s chief legal officer, disclosed in a social media post yesterday that the SEC had filed court papers under seal. The documents, scheduled for public release with redactions later today, are expected to outline the regulator’s arguments for the penalties.

The legal saga stems from the SEC’s allegations that Ripple, along with its CEO Brad Garlinghouse and co-founder Chris Larsen, unlawfully raised more than $1.3bn through unregistered securities offerings by selling XRP. 

US District Judge Analisa Torres ruled in July that Ripple’s sale of XRP, worth $728.9mn to hedge funds and sophisticated investors, constituted unlawful sales of unregistered securities. However, Torres also ruled that the sale of XRP on exchanges and through algorithms did not violate US securities law. Ripple is expected to file its response to the SEC’s motion next month. 

—

The proposed job cuts follow announcements of a comprehensive overhaul of the bank, which include a £100mn investment in IT infrastructure. Additionally, it reported last month that its £71.4mn pre-tax profit in 2023 was down by nearly 50 per cent from the £132.6mn recorded in 2022. In a statement, the bank described the cuts as “essential” for the delivery of the next phase of its strategic plan.

Last year, the bank — which is known for its consumer and small to medium-sized business lending — revealed its engagement in exclusive discussions with Coventry Building Society regarding a potential merger. The UK banking sector is currently experiencing a period of consolidation, with smaller banks seeking partnerships to enhance their competitive stance against the country’s “big four” lenders: HSBC, Barclays, NatWest and Lloyds Banking Group.

Last week, the boards of UK lenders Nationwide and Virgin Money confirmed a £2.9bn merger, aiming to establish the country’s second-largest provider of mortgage and savings products.