Exclusive: Government quietly pauses Natwest retail bidding process

The Treasury has suspended a bidding process to run the sale of its stake in Natwest in a move which throws doubt on the structure of the much touted ‘Tell Sid’-style retail deal, City A.M. can reveal.

The government, which still owns around 30 per cent of the lender after a bailout during the financial crisis, has been running a competitive tender process with retail investment firms to manage the sale of a chunk of its remaining stake to the general public.

However, those plans are now in limbo after the government wrote to bidders in mid-March saying it had suspended the process and was rethinking its strategy.

“This decision reflects our emerging views on the type of set-up and infrastructure required to deliver this complex transaction,” the Treasury wrote, in a letter seen by City A.M.

Firms including AJ Bell and Hargreaves Lansdown have reportedly been in contention to handle the sale and had submitted bids to the government. Both firms did not respond to comment.

Ministers are understood to be considering other possible disposal methods to slash its stake in the firm, including accelerated bookbuilds, in which it would offer shares to the market with little marketing, or directed buybacks to allow Natwest to buy back more of its shares directly from the government. 

Natwest has also been looking to speed up efforts to buyback the government’s holding and wrote to shareholders earlier this month to asking for approval for plans to purchase up to 15 per cent in any 12 month period, up from five per cent.

News of the bidding suspension comes after the government’s stake dipped below 30 per cent for the first time since 2009 last week, meaning it is no longer a “controlling shareholder” under UK listing rules. At its peak, the state held around 84 per cent of the firm when government injected £45bn into the bank through 2008-2009.

The Treasury insisted today the timelines of the planned retail deal had not changed and a sale would “take place this summer at the earliest, subject to supportive market conditions and achieving value for money for the taxpayer.”

“As the Chancellor set out at Spring Budget, the government intends to deliver a retail sale of part of its NatWest shareholding,” a spokesperson told City A.M.

The bidding process has been conducted behind the scenes by government, with firms vying for a role forced to sign non-disclosure agreements, Bloomberg reported in February.

The plans to offload the stake to retail investors has been seen as a key part of government’s efforts to reinvigorate retail investment in the UK

Ministers have described the retail sale of the bank as a ‘Tell Sid’ style moment for retail investment in the UK, in reference to the Thatcher-era advertising campaign used to promote the privatisation of British Gas.

Any move to delay or row back on the plans would be a major climbdown for Hunt and City minister Bim Afolami who have been banging the drum for the share sale in recent months.

In an interview in February, Afolami said the Natwest sale would help catalyse “animal spirits” in the wider market.

Additional reporting by Lars Mucklejohn