The Government faces a loss of around £20bn on its bailout of NatWest, in which it has become a minority shareholder after years of deeply below-cost share sales.

The Treasury has cut its stake in NatWest to below 50pc, giving up control of the bank for the first time since it was nationalised in the financial crisis.

The lender, formerly known as Royal Bank of Scotland, announced a £1.2bn purchase of shares from the Treasury yesterday.

It will leave taxpayers holding a 48.1pc stake in NatWest, with most of the shares sold at far below the price at which Gordon Brown’s government stepped in to save the stricken bank in October 2008.

Officials said they had sold 550m shares at 220.5p each. The Treasury has previously said it would need to sell shares at 400p to make break even on its investment, meaning it is taking ­billions in losses.

The UK eventually owned more than 80pc of the company as part of a £45.5bn bailout.

It had recouped £9.8bn up to Monday, according to the Office for Budget Responsibility, while predicted share sales will bring in a further £14.8bn until the end of the scheme 2025/26.

In total, it means the Government will get just £24.6bn of what it spent back, plus any dividends it has received over the past decade and a half. Officials have defended the eye-watering losses, saying the action was a rescue and not an investment.

RBS, which once had the biggest balance sheet of any bank in the world, was left foundering after expanding too quickly at the start of the century and becoming ensnared in the United States subprime mortgage crisis.

John Glen, economic secretary to the Treasury, said: “This sale means that the Government is no longer the majority owner of NatWest Group and is therefore an important landmark in our plan to return the bank to the private sector.

“We will continue to prioritise delivering value for money for the taxpayer as we take forward this plan.”

The Government has accelerated the pace of its NatWest sell-off over recent months, announcing a “trading plan” last summer under which Morgan Stanley is managing the sales process over a 12-month period. The Wall Street bank was instructed to only sell shares at a price point that “delivers value for money for the ­taxpayer”.

Analysts at Credit Suisse estimated the UK would sell about 8.8pc of NatWest shares as part of this plan, meaning the Treasury will be left with a stake of just under 45pc.

The Government remains the biggest shareholder in NatWest by some distance. The next-biggest investor is a pension fund of the Norwegian central bank, which holds 3.4pc, according to Bloomberg data.

In 2007, RBS was the biggest bank in the world, snapping up Dutch lender ABN Amro for £49bn.

Twelve months later the bank was in tatters, receiving emergency funding before a full bailout. A second rescue package left the Government owning 84pc of the bank at a cost of £46bn, and an average of 500p per share.

RBS made a record-breaking £24bn loss in 2008.

At the time of the 2009 top-up to the bailout Alistair Darling, then Chancellor, said despite this majority stake “the institution will remain as a privately quoted company. That will provide potential gains in the long term for the taxpayer and an easier return to full commercial ownership when the shares are sold and the proceeds come back to the taxpayer.”

RBS stake

In 2007, RBS was the biggest bank in the world, snapping up Dutch lender ABN Amro for £49bn.

Twelve months later the bank was in tatters, receiving emergency funding before a full bailout. A second rescue package left the Government owning 84pc of the bank at a cost of £46bn, and an average of 500p per share.

RBS made a record-breaking £24bn loss in 2008.

At the time of the 2009 top-up to the bailout Alistair Darling, then Chancellor, said despite this majority stake “the institution will remain as a privately quoted company. That will provide potential gains in the long term for the taxpayer and an easier return to full commercial ownership when the shares are sold and the proceeds come back to the taxpayer.”

What has happened since?

August 2015: George Osborne, then-Chancellor, announces the first sale of a £2.1bn stake in RBS. The 330p share price represents a £1bn loss on the rescue price, taking the Government’s holdings down to just below 73pc of the bank. Labour accuses Mr Osborne of a “fire sale” of the shares, which have not traded at a higher price since the sale.

June 2018: A second sale of £2.5bn-worth of stock, representing a bigger loss at a price of 271p per share, takes the Treasury’s stake down to 62.4pc 

October 2018: RBS pays its first dividend since the crash

July 2020: RBS Group rebrands as NatWest in a break from its chequered past

March 2021: The Chancellor, Rishi Sunak, sets out a plan to sell full stake by 2025-26. RBS buys £1.1bn of shares back from the Government at 190.5p each, taking the remaining stake to 59.8pc.

May 2021: Another £1.1bn of shares are sold to institutional investors for 190p per share, taking the taxpayer to just below 55pc ownership.

June 2022: The Government instructs Morgan Stanley to drip shares onto the market to lower the stake further, the same mechanism that helped sell down the shareholding in Lloyds Banking Group when that bailed-out institution was also being returned to private hands.

March 2022: The sale of a £1.2bn stake, at a price of 220.5p a share, takes the Government’s stake down from 50.6pc to 48.1pc.