NatWest Privatisation Draws Closer With U.K Treasury Selling Remaining Stock

May 14, 2024

The UK Treasury is set to announce a multibillion-pound sale of its remaining stake in NatWest to accelerate the bank’s privatisation and boost retail investment. Currently holding a 27% stake valued at around £7.5 billion, the Treasury aims to reduce this below 10% by the end of the year through a sale to institutional investors and a retail offering.

The initiative, part of Chancellor Jeremy Hunt’s broader effort to invigorate London’s capital markets, may be influenced by the timing of the upcoming general election. The sale will be marketed through a campaign led by advertising agency M&C Saatchi, with legal and financial advice from Freshfields Bruckhaus Deringer, Barclays, and Goldman Sachs. Brokers Hargreaves Lansdown and AJ Bell will assist in marketing the shares.

The Treasury plans to offer shares at a discount, potentially including a bonus share for every 10 held for a year, to attract retail investors. The minimum investment might be set at £250, with a maximum of £10,000. UBS analysts predict that by mid-July, the government’s stake could drop to 17% from a possible buyback by NatWest, necessitating a sale of approximately £2 billion worth of stock to achieve the 10% target.

NatWest’s stake reduction below 30% in March, removing it as a controlling shareholder, has been positively received by investors. US investment management giant Capital Group has since become one of NatWest’s top 30 shareholders.

Despite criticism over the government’s influence in the bank’s operations, NatWest’s new chair Rick Haythornthwaite reassured stakeholders of minimal Treasury intervention. The bank, now the top performer on the FTSE 100 this year with shares up 45%, has seen improved earnings and a refreshed management team.

Separately, NatWest Social & Community Capital (S&CC) will now invest its £6 million residual funds to create social and environmental impact, guided by Tribe Impact Capital. This shift aligns all of S&CC’s financial assets with its mission to support social businesses in the UK, targeting a 2% annual return plus inflation.

NatWest’s future under private ownership looks promising, with plans to enhance its market position and contribute positively to social causes through S&CC’s pioneering investment strategy.