What’s happening to the NatWest share sell-off?

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last updated 10 June 2024

Prime Minister Rishi Sunak’s decision to call a general election this July has delayed - and likely put paid to - several pieces of legislation.

Among the bills that the Conservative government had hoped to pass - but will now be consigned to the Parliamentary scrap heap - are the Renter’s Reform Bill and Sunak’s plan to create a ‘smoke-free generation’. Other laws, such as the Leasehold Reform Bill, have been pushed through at the last minute.

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It comes amid increasing interest in UK share ownership. So, what’s happening to the policy?

At present, the UK government holds a 27% stake in the NatWest group - a collection of brands that includes the Royal Bank of Scotland, Ulster Bank and Coutts.

This significant shareholding is a legacy of the 2008 Financial Crisis, when Gordon Brown’s government opted to prop up several UK banks in a bid to protect consumer deposits. At the peak of this exercise, the public held an 84% stake.

Under the Conservatives, the plan had been to sell the taxpayer’s entire shareholding in NatWest by the 2025/2026 financial year. It’s expected a range of methods will be employed to achieve this, including accelerated bookbuilds and directed buybacks with NatWest, as well as via sales through the ongoing trading plan. Retail investors may also be able to get involved.

During March’s Spring Budget, Jeremy Hunt said a “sale would take place this summer at the earliest, subject to supportive market conditions and achieving value for money for the taxpayer". The accompanying Treasury documents said the “ongoing trading plan is making good progress against [its] objective, having now generated over £5.2 billion of proceeds since launch”.

But the plan could be delayed beyond the summer as a result of the general election announcement. MoneyWeek asked the Treasury whether there would be a delay. A spokesperson said: "A retail offer will not happen during the election period.”

The election will take place on 4 July, with Parliament set to be summoned to meet again on Tuesday 9 July. Early votes will focus on the election, or re-election, of the speaker and the swearing-in of MPs. The state opening of Parliament will not take place until Wednesday 17 July.

It means it could easily be August before a NatWest share sell-off begins, given it’s unlikely to be a top priority for the next government. The plan might not come to fruition until even later in the year if the next Chancellor wants to review it.

Should Labour form a government after the election, the timing of a sell-off may coincide with its first Budget. The party’s shadow Chancellor Rachel Reeves has said this will take place in September.

Neither of the two major parties most likely to form the next government has so far announced what they will do with the NatWest shareholding if they win the election.

Market analysts have urged the next party of government to consider reviving the NatWest sell-off.

Dan Coatsworth, investment analyst at AJ Bell, said the delay was a “missed opportunity” to encourage new people into investing. He added: “The government offering its NatWest shares below market price could have encouraged more people to buy shares for the first time.

“While many adults aged 22 or older already put money into the stock market via a workplace pension thanks to the auto-enrolment scheme, a much smaller number of individuals will have bought shares directly. Getting some experience through the purchase of NatWest shares might have been the first step to fostering a longer-term habit of putting money into the market on a regular basis beyond workplace pension contributions.”

Coatsworth also said a sale could raise £6.5bn for the Treasury, if it sold its 26.95% stake at a 10% discount [costing correct as of 28 May]. It means it could be “a straightforward way to raise a significant amount of money” for the public purse.

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, echoed Coatsworth. Looking at previous privatisation schemes, she said they had “super-charged investing habits” amongst novice investors.

She added that any sell-off “should be viewed as an opportunity to spread awareness about the importance of diversification, not putting too many eggs in one basket”.

Research by asset manager abrdn suggests that if, or when, the NatWest share sale happens, there will be plenty of interest.

It surveyed 3,000 adults and found 23% were likely to buy the shares if the mooted NatWest share sale goes ahead – and that’s without a national advertising campaign.

“It’s ironic that just as the UK stock market has started to pick up some momentum, the pause button has been pressed on the NatWest share sale as the UK heads to the polls," says Jason Windsor, interim chief executive at abrdn.

"The good news is that this presents an opportunity for the next government to take the time and space to get this right. That should mean opening up a broader conversation beyond NatWest with a campaign that focuses on the central role investing in the stock market can play in helping to build the savings and investing culture that the country dearly needs.”

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Henry Sandercock has spent more than eight years as a journalist covering a wide variety of beats. Having studied for an MA in journalism at the University of Kent, he started his career in the garden of England as a reporter for local TV channel KMTV.

Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine, but also on major BBC Radio 4 programmes like The World at One, PM and Broadcasting House. Switching to print media, he covered fresh foods for respected magazine The Grocer for two years.

After moving to NationalWorld.com - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis, becoming the title’s money editor in early 2023. He covered everything from the energy crisis to scams, and inflation. He also has bylines in MoneyWeek.