PLANS for a retail offer of shares in Royal Bank of Scotland owner NatWest Group have been scrapped.
The previous UK Government had planned to sell taxpayers’ remaining stake in the bank – a legacy of its £45.5 billion bail-out during the financial crisis of 2008 and 2009 – to retail investors this summer. Former Chancellor of the Exchequer Jeremy Hunt cited the ‘Tell Sid’ campaign which advertised shares in British Gas, amid the Tory privatisation spree of the 1980s, when he announced the plan in the autumn statement.
Labour’s landslide victory in the General Election earlier this month cast doubt on whether the sale would go ahead, and now Chancellor Rachel Reeves has revealed today that the plan had been ditched.
READ MORE: Bank reveals it has spent £24m on 'Tell Sid' offer
In a statement on public spending inheritance to the House of Commons today, Ms Reeves said: “Mr Speaker, the previous Government had plans for a retail sale of NatWest shares. We intend to fully exit our shareholding in NatWest and expect to do so by 2025-26. But having considered advice I have concluded that a retail share sale offer would involve significant incentives that could cost taxpayers hundreds of millions of pounds.
“It would therefore not represent value for money, and it will not go ahead. This is a bad use of taxpayers’ money and we will not do it.”
The decision comes shortly after NatWest revealed on Friday that it had spent £24 million on preparations for the offer.
The UK Government’s stake dipped below 20% earlier this month, as a result of the ongoing trading plan and completion by the bank of a directed buy-back in May.
READ MORE: Royal Bank smashes City forecasts, sending shares soaring
NatWest cheered investors on Friday when it raised its profit guidance for the year after first-half earnings were better than expected, and announced a deal to acquire a £2.5bn portfolio of prime UK residential mortgages from Metro Bank.
Danni Hewson, head of financial analysis at stockbroker AJ Bell, said: “Offering up what’s left of the Government stake in the bank in a 'Tell Sid' style campaign would undoubtedly have come with a significant discount, a discount that the Government feels is unnecessary considering the bank’s recent performance and the interest in snapping up the shares by institutional investors.
“Whilst protecting the taxpayer is understandable and even laudable, the share sale could have been used as a valuable catalyst to get first time investors on board.
“Creating a teaching moment that could have changed the investing landscape for the better would have been exciting, although there are still other ways the Government could boost the number of UK retail investors.”
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