NatWest said it had spent £24 million on shelved Tory government plans to sell shares in the bank and reported a 16 percent fall in profits in the first half of the year.

The taxpayer-funded bank’s bill for the “Tell Sid”-style campaign comes after it was forced to pay for advertising and preparations for a share sale that was due to launch in the summer before the surprise announcement of the July 4 general election.

The new Labour government has not yet confirmed whether it will revive the share sale plans.

Paul Thwaite, chief executive of NatWest, said he expected an announcement of a possible share sale as part of the government’s next budget clause, but stressed that the decision would have to be made by the Treasury.

He said: “The reality is that the policies for any private share sale are usually set in the context of tax events.

“The new government had none.

“We expect this to be the case at the next budget event.”

Details of the costs were revealed in NatWest’s half-year results, which showed a 16 per cent fall in pre-tax operating profit to £3 billion for the six months to June 30. However, this was better than feared and the bank had raised some of its key performance metrics for the year.

NatWest also announced that it had agreed to buy around £2.5 billion worth of residential mortgages from Metro Bank for £2.4 billion in cash, adding around 10,000 borrowers to the group.

This follows NatWest’s move in June to buy most of Sainsbury’s banking business, adding around £1.4 billion in unsecured personal loans, £1.1 billion in credit card balances and around £2.6 billion in customer deposits.

The bank’s shares rose 8 percent in trading on Friday morning.

According to Thwaite, NatWest customers were “starting to become more confident”, with lending increasing and savings rising by £1.5 billion, or 0.8 per cent, in the second quarter.

However, the group’s mortgage portfolio fell by £700 million in the second quarter as repayments – the repayment of mortgages – more than offset increased new borrowing.

In addition, the company released £45 million of the cash it had previously set aside for bad debts in the second quarter, bringing the total impairment charge for the first half to £48 million, compared with £223 million a year earlier.
Many households are beginning to view their finances more positively

Mr Thwaite said: “With inflation falling and employment remaining high, customer confidence continues to rise.

“Many households are beginning to view their finances more positively.”

Taxpayers’ share in NatWest has fallen from around 38 percent in December to below 20 percent in recent weeks as the government continues to sell off its stake.

The bank – formerly known as the Royal Bank of Scotland – was at one point 84 percent state-owned following a gigantic £46 billion bailout at the height of the financial crisis.

But the Treasury is currently selling its stake in the bank, which includes Coutts, as part of its efforts to return the bank to full private hands.

In this context, the former Tory government had announced plans to sell some of its shares to private investors, in a share issue similar to British Gas’s ‘Tell Sid’ campaign in 1986, which encouraged the sale of shares to the public after privatisation.

It is understood that some of the £24 million NatWest spent on the retail share plan’s marketing costs may be reused for general promotional purposes, although the bill also covers legal costs and expenses.