NatWest Retail Stock Offering Seen In Doubt After Labour Win

(Bloomberg) -- A proposed retail offering of government-held shares in NatWest Group Plc is looking less likely following the change of power in Britain.

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That’s according to UK stockbroker Shore Capital Group Ltd. It says the new government may be unwilling to persist with an idea floated by former Chancellor of the Exchequer Jeremy Hunt to augment the ongoing program of incremental sales.

Hunt’s replacement, the Labour Party’s Rachel Reeves, now faces a decision over how best to exit the financial crisis-era shareholding that’s currently worth about £6 billion ($7.7 billion).

“I would say it is now unlikely that we will see a retail offer in the form previously being mooted,” said Gary Greenwood, a banks analyst at Shore Capital.

The taxpayer’s stake in NatWest has continued to drop this year via the Treasury’s ongoing incremental sales of shares and so-called directed buybacks by the company. The UK state reduced its stake to 20.92% from 21.93% on Jun. 24, according to a stock exchange filing.

“The shares are being sold down at a reasonable pace, so there may not need to be an alternative,” added Shore’s Greenwood. “I also wonder whether Rachel Reeves will want to be seen to be continuing with what was essentially a Conservative programme.”

The former government said last year that it was considering selling shares it holds in NatWest to retail investors, as it sought to hasten its exit from the lender rescued in the 2008 financial crisis.

Back then, the government became the majority shareholder in what was then the Royal Bank of Scotland, taking a 58% stake. By December 2009, the government’s total economic ownership had increased to 84.9%.

While remaining its biggest shareholder, the government is no longer considered a ‘controlling shareholder’ after its ownership of the bank dropped below 30% in March.

“We are pleased with the continued momentum in the reduction of HM Treasury’s stake in the bank,” said a spokesperson for NatWest, via email. “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,” the spokesperson added.

NatWest declined to comment when asked about the option of a retail offering. Bloomberg has contacted the Treasury for comment.

Another alternative for Reeves would be selling chunks of shares to institutional investors. Back in March 2021 the government sold part of its stake in NatWest for £1.13 billion.

(Updates to show government increased stake in 2009, in eighth paragraph.)

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