LONDON, May 22 Reuters British statebacked bank NatWest has agreed to buy 1.3 billion pounds 1.6 billion worth of its shares back from the government, as it edges closer towards private ownership 15 years after it was bailed out in the global financial crisis.

The deal will reduce the government39;s stake in the former Royal Bank of Scotland to 38.69 from around 41.4.

The bank returned to majority private ownership in March 2022 after a similar block sale, as the government targets fully returning NatWest to private ownership by 2026.

NatWest shares gained 0.9 in early trading.

Today39;s sale is another major milestone in returning NatWest to full private ownership as promised, Andrew Griffith, economic secretary to the Treasury, said in a statement.

NatWest said it had agreed to buy the shares at 268.4 pence per share, representing a further loss for taxpayers. The lender was bailed out for 45 billion pounds in 2008 at a price of 502 pence per share.

Banking shares have struggled this year through a period of wider industry turmoil sparked by the failure of several U.S. regional lenders and the emergency takeover of Credit Suisse, but have recovered some ground in recent weeks. NatWest shares are up around 15 on this time last year.

The government clearly decided that now is a good moment to sell, said Victoria Scholar, head of investment at interactive investor.

Britain39;s finance ministry in April extended a trading plan enabling a series of smaller sales…