UK government sells £1.26bn of NatWest shares, taking stake below 40%

The UK government has sold a £1.26bn stake in NatWest, taking the state’s shareholding below 40% for the first time since the bank’s emergency bailout in 2008.

It marks the sixth block sale of NatWest shares since the financial crisis, and brings the government one step closer to returning NatWest to full private ownership.

The government has set a self-imposed deadline to fully privatise the bank by 2026, roughly 18 years after taxpayers spent £46bn to save NatWest Group, then known as Royal Bank of Scotland Group, from collapse.

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The bailout resulted in the government taking an 84% stake in the high street lender, with the latest block sale having reduced its shareholding to 38.6% from 41.4%.

“This transaction reduces government ownership below 40% and demonstrates positive progress on the bank’s strategic priorities and the path to privatisation,” said the NatWest Group chief executive, Alison Rose.

The current timeframe for the sell-off is twice as long as it took for the government to offload its holding in Lloyds Banking Group, which bought HBOS in a government-orchestrated rescue plan at the height of the financial crisis and was handed a £20.3bn bailout in return. Lloyds bought back the last of its shares from the government in 2017.

The main reason for the delay is that the government is trying to avoid losing taxpayer money in the process of disposing of its NatWest stake. The Treasury said on Tuesday that meeting its 2025/2026 deadline would depend on how financial markets were faring, and whether it could assure “value for money for taxpayers”.

Over the past decade, shares in NatWest Group, which has a market value of about £25bn, have tended to trade at barely half the average price of the bailout. The government said on Monday that it had agreed to sell 469m shares at a price of 268.4p each. That is nearly half the 500p that it paid for the shares in 2008.

Last month, the government extended a separate plan to sell off a 15% stake in NatWest by drip feeding shares back into the market by another two years.

It came after weeks of banking turmoil in March that led to the collapse of Credit Suisse and a handful of mid-sized banks in the US. Shares of UK banks were hit, amid fears over a fresh financial crisis.

Sophie Lund-Yates, the lead equity analyst at Hargreaves Lansdown, said: “The UK government has now sold over half of its shareholding in NatWest, following peak ownership of 84% when it had to rescue the firm during the global financial crisis.

“While the change doesn’t fundamentally change much about NatWest, other than giving it a little more flexibility over the capital base, the broader change is a symbolic one. Removing government stabilisers is a clear marker of the bank entering a new chapter.”