Natwest: UK government’s stake drops below 20 per cent as privatisation plan accelerates

The government has offloaded another chunk of its stake in Natwest today and taken its holding in the company below 20 per cent for the first time since the financial crisis, as it accelerates plans to return the lender to private ownership.

In a statement this morning, the big four bank said the government had now almost halved its stake since December with the latest share sale slashing its stake to 19.97 per cent.

“We are pleased with the continued momentum in the reduction of HM Treasury’s stake in the bank,” Natwest chief, Paul Thwaite, said. 

“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,” he added.

The latest sale comes as part of a push by the government to return the bank to private hands by as early as next year, with Natwest ramping up its repurchase of stock from the state.

After consulting with shareholders earlier this year, Natwest won permission to buy back bigger tranches of shares from the government and has since sped up its repurchase programme.

Ministers under Rishi Sunak had planned to also offload a portion of the stake to retail investors in a bid to ignite a culture of retail investment in the country. However, the plans were shelved after he called a surprise election in May.

The government’s investment arm, UKGI, has held a stake in the bank since 2008 when it was forced to step in and bailout the lender during the financial crisis.

After its stake fell below 30 per cent in March, the state ceased to be classed as a ‘controlling shareholder’ for listing rule purposes. Dropping below 20 per cent will now no longer be classed as a ‘related party’ of the bank. 

The technical changes ease the influence of government on decision-making and will reduce its voting power on areas like the appointments of new directors.

The Treasury has gradually offloaded its stake over the years at a loss to the taxpayer and plans to fully privatise the bank by 2025 to 2026. While taxpayers paid £45.5bn for the bailout, shares in the company have since halved.