Government to Reach New Milestone in NatWest Group Stake Sale
The government’s sale of its stake in NatWest Group is set to reach a significant milestone in the coming days as it falls below the threshold at which the Treasury is deemed a related party under stock exchange rules.
According to sources, the taxpayer’s shareholding in the high street lender is expected to drop below 20% next week, potentially coinciding with the day of the general election.
This development comes as the UK listing rules are expected to be amended later this year, raising the classification of related parties from a 10% shareholding to 20%. As a result, falling below this level would trigger the related party clause after a year, marking another key step in NatWest’s journey back to full private ownership.
In addition, once the Treasury is no longer classified as a related party, it would reduce the bank’s administrative burden, according to Whitehall insiders.
NatWest’s stake in the bank, which was once at over 80%, has been gradually reduced in recent months through a trading plan in which the Treasury’s share has been steadily sold in the market. The bank has also been using surplus capital to buy back stock from the government, further lowering its stake.
While a spokesperson for NatWest declined to comment on the potential reduction of the government’s interest in the bank, they did say that “returning NatWest Group to private ownership is a shared ambition and we believe it is in the best interests of both the bank and all our shareholders.”
This latest development follows the recent cancellation of plans for a retail offering of a multibillion-pound portion of the government’s stake, due to the timing of the election. Under the proposed plan, ordinary investors would have been given “bonus” shares if they held onto stock acquired through the offer. It is still uncertain whether the Labour party, if elected, would proceed with the plan.
A combined retail and institutional placing would bring the government closer to fully privatizing NatWest, which received a £45.5bn bailout from the public 16 years ago. Under the leadership of Paul Thwaite, who was confirmed as the permanent CEO earlier this year, the bank has made significant strides, including striking a deal to acquire the majority of Sainsbury’s Bank and expressing confidence in its future.
NatWest also has a new chairman, Rick Haythornthwaite, who took over from Sir Howard Davies at the annual meeting in 2020. However, the bank still faces the potential legal challenge from Reform Party leader Nigel Farage, who was “debanked” by NatWest last year, leading to the resignation of former CEO Dame Alison Rose.
Despite these challenges, NatWest remains committed to its goal of exiting state ownership. In March, the Treasury’s share in the bank fell below the crucial 30% threshold, relinquishing its control. The government has previously stated its intention to sell off the remaining stake by 2025.
Shadow Chancellor Rachel Reeves has also affirmed Labour’s commitment to the plan, as long as it provides value for money.