So, this morning’s announcement that the FTSE 100 bank has spent £1bn on the purchase of 263 million shares at 380.8p per share, reducing the government’s stake in the bank from 14.2% to 11.4%, sees it edge closer to full privatisation.
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NatWest has now bought back £2.2bn of shares in 2024, representing 7.66% of share capital, as the government ramps up its exit from the bank as part of plans to reduce taxpayers’ stake which was 84% after it stepped in to rescue Royal Bank of Scotland at the height of the global financial crisis in 2008.
The bank’s purchase of this significant tranche of shares from the Treasury was described as a “another important milestone”. In July, its stake in NatWest dropped below 20% for the first time since its 2008 nationalisation. The Treasury has gradually reduced its equity holding in the lender.
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An upbeat Paul Thwaite said: “As a result of NatWest Group’s continued strong performance, we are pleased to have today completed our second buyback of government shares of 2024, further reducing HM Treasury’s shareholding.”
The bank’s chief executive added: “This transaction represents another important milestone on the path to full privatisation. We believe it is a positive use of capital for the bank and for our shareholders, and we are pleased with the sustained momentum in reducing HM Treasury’s stake in NatWest Group throughout this year.”
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NatWest has been able to accelerate the share sale plan following changes to listing rules earlier this year, which removed the 5% cap on the amount of stock that could be bought back in a year.
Meanwhile, had the Conservatives retained power in this year’s General Election, it is likely that their plans for a share sale to the public, designed to create a “new generation of retail investors”, would have proceeded.
Former chancellor Jeremy Hunt’s vision was a nod to Margaret Thatcher’s privatisations of big businesses like British Telecom and British Airways in the 1980s – which led to million Britons becoming shareholders for the first time.
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He declared last year that “it’s time to get Sid investing again”, pointing to the high-profile “If you see Sid, tell him” campaign in the 1980s, that saw about 1.5 million Britons buy British Gas shares.
However, the new Labour government abandoned these plans in July, with Chancellor Rachel Reeves stating the government still intended to fully exit its shareholding in NatWest by 2025-26, but that a retail share offer would mean having to offer the public discounts worth hundreds of millions of pounds and would not represent value for money for the taxpayer.
