NatWest sell-off moves closer as the government offloads more shares

NatWest Group Plc Bank Branches Ahead Of Earnings

(Image credit: Bloomberg / Contributor)

published 25 November 2024

The UK government’s stake in NatWest has fallen to below 11% after the Treasury sold off further stock in the bank.

The move comes less than two weeks after NatWest bought back £1 billion of shares from the Treasury earlier this month.

Paul Thwaite, the NatWest chief executive, said at the time: “As a result of NatWest group’s continued strong performance, we are pleased to have today completed our second buy-back of government shares of 2024, further reducing HM Treasury’s shareholding."

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The transactions mean NatWest continues to edge closer to full privatisation and comes after chancellor Rachel Reeves abandoned plans to sell the government’s remaining stake in NatWest to the public.

The bank’s share price has almost doubled over the past 12 months. At the end of last month, it rose by just shy of 5% on the day it revealed its operating profits were £200 million higher than expected during the third quarter.

The banking group said it made an operating pre-tax profit of £1.7 billion between July and September 2024, nearly a third higher than the £1.3 billion generated during the same period last year. Analysts were forecasting profits of £1.5 billion.

The increase was partly driven by an increase in lending and the amount of money customers deposited with the bank.

The results sent shares in the bank to their highest levels since 2015.

Thwaite said at the time: “The strength of NatWest Group’s performance is underpinned by the support we provide to our 19 million customers in every nation and region of the UK.

“Throughout the third quarter of 2024, we have grown our lending, helping customers to buy or remortgage their homes or to start and grow their businesses. With customer activity increasing… and defaults remaining low, we are well placed to succeed with our customers and for our shareholders in the months and years ahead.”

Reeves abandoned plans to sell the government’s remaining stake in NatWest to the public in July, saying it would not “represent value for money”.

The Labour chancellor said that a retail share sale of the bank would now not happen as it would have meant having to offer the public discounts worth hundreds of millions of pounds, which would be damaging for taxpayers.

At one stage, NatWest was 84% owned by the state after a £46 billion bailout at the height of the financial crisis.

A public sale would "not represent value for money, and it will not go ahead", Reeves told MPs as part of a statement on public finances. She added: “It’s a bad use of taxpayer money and we will not do it."

Sarah Coles, head of personal finance at Hargreaves Lansdown, said at the time: “The news that retail investors will be frozen out as NatWest shares are sold off is bitterly disappointing. Retail investors are all too often overlooked and yet they are important backers of UK companies, holding a greater proportion of their assets in the UK compared to the likes of pension funds.”

Chris is a freelance journalist, and was previously an editor and correspondent at the Financial Times as well as the business and money editor at The i Newspaper. He is also the author of the Virgin Money Maker, the personal finance guide published by Virgin Books, and has written for the BBC, The Wall Street Journal, The Independent, South China Morning Post, TimeOut, Barron's and The Guardian. He is a graduate in Economics.