NatWest was forced to spend £24m on the former Conservative government’s aborted “Tell Sid” advertising campaign featuring Sir Trevor McDonald, which would have resulted in a chunk of the bank’s state-owned shares being sold to the general public in a highly anticipated privatisation drive.
The price tag emerged when the bank released its second-quarter results and announced it was snapping up a number of mortgages from the smaller rival Metro Bank for £2.4bn.
Agreements with the government dating back to the bank’s bailout in 2008 meant NatWest was on the hook for costs linked to the campaign, including advertising, printing and distributing documents, as well as legal fees and expenses.
The Tory government had already hired a fleet of advisers, including from Goldman Sachs, Barclays, the advertising house M&C Saatchi, the law firm Freshfields and the retail share sale experts Solid Solutions, to prepare the programme.
The process, which the former chancellor Jeremy Hunt announced during last year’s autumn statement, was due to launch this summer, with a big public “Tell Sid” campaign – a reference to the slogan used to encourage the public to buy shares in the newly privatised British Gas in 1986.
Hunt’s plan was part of the Tories’ efforts to return the bank – formerly known as Royal Bank of Scotland – to private ownership by 2025-26, after its £46bn taxpayer bailout during the height of the financial crisis. There were also hopes that the campaign would encourage everyday savers to start investing in British stocks.
The Guardian revealed last month that TV ads had already been filmed featuring McDonald, the veteran newsreader and presenter, popping up around the UK asking the public: “Are you in?”.
However, the campaign plans were abruptly cancelled in May after Rishi Sunak called an early general election.
The new Labour government has not given any indication on whether it will pick up where the Tories left off, leaving NatWest to shoulder sunk costs.
The figures were released as NatWest reported earnings results showing pre-tax profits slipped 4.1% to £1.7bn over the three months to the end of June, compared with a year earlier.
It came as the bank suffered a 2.4% drop in net interest income, which is a key measure of profitability for lenders, and accounts for the difference between what is charged for loans and what is paid out to savers.
after newsletter promotion
However, that did not stop the chief executive, Paul Thwaite, from hoovering up 10,000 new customers through the acquisition of Metro Bank’s prime mortgage book. It is Thwaite’s second acquisition this summer, after striking a deal to buy most of Sainsbury’s Bank in June.
“There has been growth across all three of our businesses, we have attracted over 200,000 new customers, and our acquisition from Sainsbury’s Bank is expected to add around 1 million customer accounts on completion,” Thwaite said in a statement on Friday.
“We have also agreed to acquire £2.5bn of UK prime residential mortgages from Metro Bank, adding further scale to our retail banking business.”