The UK Government Cuts NatWest Stake, No Longer Controlling Shareholder

By John Lopez

Mar 25, 2024 12:35 PM EDT

According to statements from the finance ministry on Monday, Mar. 25. the British government has significantly reduced its stake in NatWest Group Plc (NWG.L), dropping below the threshold that designates it as the controlling shareholder.

NatWest, formerly known as the Royal Bank of Scotland, was bailed out by the government during the global financial crisis, reaching a peak ownership of 84%.

The UK Slashes Natwest Stake, No Longer a Shareholder

Bloomberg reports that with the latest sell-off, the government's stake now stands at 29.8%, down from over 45% in late 2022. This reduction below the 30% threshold frees NatWest from certain regulatory requirements, such as restrictions on director appointments, under UK listing rules.

The move is part of the government's efforts to accelerate the return of NatWest to private ownership by a target date of 2026. Plans include selling a portion of its stock to the public as early as June, aiming to create a new generation of retail investors. 

Chancellor Jeremy Hunt has reaffirmed the Treasury's commitment to privatization during his recent budget announcement.

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Pedestrians walk past a branch of Natwest bank, in central London, February 14, 2023. (Photo by Justin TALLIS / AFP)
(Photo : Photo by JUSTIN TALLIS/AFP via Getty Images)

'Shared Ambition'

NatWest expressed satisfaction with the government's continued commitment to privatization, highlighting recent momentum towards achieving this "shared ambition." 

Last month, the bank appointed Paul Thwaite as its permanent chief executive, following Dame Alison Rose's resignation over a debanking scandal involving Nigel Farage.

Financial Times notes that critics have raised concerns about the political motivations and costs associated with the share sale. However, the Treasury has been steadily reducing its stake through sales to institutional investors, with the upcoming public share sale marking a significant step in the privatization process.

The government's stake reduction in NatWest represents a significant milestone in its efforts to return the bank to private ownership and marks a pivotal moment in the UK's financial landscape.

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