The UK Government’s stake in NatWest Group, owner of Royal Bank of Scotland, has dipped below 20% for the first time since 2008, as doubts were raised over the prospect of a retail offer of shares in the lender.
The bank became majority owned by UK taxpayers when it was rescued by the Government in a £45.5 billion bail-out during the financial crisis of 2008 and 2009.
But over recent years the public’s stake has gradually been whittled down as a result of the bank buying back shares from the Treasury in May and the Government’s ongoing trading plan.
The UK Government’s stake in the institution, which changed its name from Royal Bank of Scotland to NatWest at corporate level in July 2020, has nearly halved since December, moving from 37.98% to 19.97% yesterday.
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Government ownership fell below 30% in March, at which point it ceased to be classed as a ‘controlling shareholder’ for listing rule purposes.
Paul Thwaite, chief executive of NatWest, said: “We are pleased with the continued momentum in the reduction of HM Treasury’s stake in the bank. The holding has almost halved throughout the course of 2024, moving below 20% today.
“Returning NatWest Group to full private ownership remains a key ambition and we believe it is in the best interests of both the bank and all our shareholders.”
Prior to losing the general election on July 4, the Conservative Government had planned to launch a retail offer of the public's shares in the bank via a 'Tell Sid' style offer, echoing the retail sale of shares in British Gas in the 1980s, this year.
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But Dan Coatsworth, investment analyst at AJ Bell, said it “looks increasingly unlikely” that the Labour Government will resurrect plans for a public sale.
“Even since the general election was called on 22 May, the Treasury has been quietly offloading parcels of NatWest shares in either off or on-market transactions,” Mr Coatsworth said.
“Since postponing the public share offering, the Treasury’s stake in NatWest has gone from 26.95% to 19.97% via five rounds of sales, implying there is enough demand from institutional investors to mop up its stock.
“Maintaining that pace of sales would suggest the Treasury may not need to resort to a public share offering, but ditching the plan completely would be a missed opportunity. Holding a big campaign to clear the remainder of its holding could be a major catalyst to get people investing for the first time.
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“A spate of privatisations in the 1980s lured in a new generation of investors and many of them went on to develop a healthy saving and investing habit, squirreling away money to provide for a better future. While the previous government’s NatWest campaign was never going to be a full privatisation, there were signs it was going to use similar marketing tactics as those the ‘Tell Sid’ campaign used to sell shares in British Gas in 1986.
“The Treasury’s latest disposal of a slug of NatWest shares takes the government’s ownership below 20% for the first time since the bank was bailed out in the 2008 financial crisis.”
Shares in NatWest closed at 322.8p last night, down 0.8p.
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