NatWest Group, Edinburgh, contributed £500 million ($691 million) to its main pension fund following an agreement to buy back shares from the U.K. government.
The banking group agreed with Her Majesty's Treasury to make an off-market purchase of £1.1 billion in shares, according to a regulatory filing Friday. The move triggered the bank to contribute £500 million to its main pension fund in line with a memorandum of understanding announced in April 2018. The main pension fund had £51.3 billion in assets and £43.9 billion in liabilities as of Dec. 31, according to its annual report.
The payment is the first under the agreement, a spokesman confirmed.
NatWest agreed in 2018 to make a total £1.5 billion in contributions to the fund starting in January 2020. The bank expects to contribute a further £500 million in both 2022 and 2023.
The 2018 agreement, which included a £2 billion contribution in the second half of that year, said that once the additional £1.5 billion is paid no further deficit contributions will be required for the main pension fund, subject to normal market conditions.
The U.K. government became a majority shareholder in NatWest — at the time Royal Bank of Scotland — at the height of the global financial crisis, bailing it out to the tune of £45.5 billion between October 2008 and December 2009. It held a total 84.4% stake, according to NatWest's website.
The government began selling NatWest shares back to the private sector in August 2015. Friday's sale brings the government's stake down to 59.8% of total shares, the regulatory filing said.