The UK government will explore options for selling off its remaining 38.6% stake in the high street lender NatWest Group and plans to invite the public to buy shares, Jeremy Hunt has announced.
Delivering his autumn statement in parliament, the chancellor said he would “explore options” for a retail share offer in the next 12 months but said it would be “subject to supportive market conditions and achieving value for money”. This means shares can be bought by anyone, whereas previous share sales were limited to financial institutions.
In a reference to the privatisations of the 1980s, when shares in British Gas were advertised to retail investors with the slogan “If you see Sid … tell him”, the chancellor declared: “It’s time to get Sid investing again.”
NatWest shares closed down by 1.4% at 204.2p on Wednesday, giving the company a market value of £18bn. They have lost a quarter of their value this year.
The government took an 84% stake in the lender during the 2008 financial crisis, when it pumped £45.5bn into the bank, then known as Royal Bank of Scotland.
Since then, it has sold down its stake via six block sales. In May it sold shares worth £1.26bn, taking the state’s shareholding below 40% for the first time since the 2008 bailout. This last sale reduced the government’s shareholding to 38.6% from 41.4%, as it 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.
Susannah Streeter, the head of money and markets at analysts Hargreaves Lansdown, said: “Giving retail investors a slice of ownership in NatWest is a welcome move given that they have been left out of previous sales, which have been reserved for institutional investors.
“This is a recurrent theme – retail investors are rarely offered the full suite of investing opportunities – so this would buck the trend. Further sales would again bring NatWest closer to full public ownership and would bring to a close crisis actions taken during the financial crisis.”
The government reaffirmed its aim to fully privatise the bank by 2025-26. The timeframe is longer than it took the government to offload its holding in Lloyds Banking Group, which was handed a £20.3bn bailout after it took over Halifax Bank of Scotland (HBOS) in a government-orchestrated rescue plan at the height of the financial crisis. Lloyds bought back the last of its shares from the government in 2017.
With Lloyds, the government abandoned a plan for a retail offering to the public in 2016 – a pledge by George Osborne – and decided to sell its remaining stake on the stock market instead at prices below the 73.6p average price that taxpayers paid for their stake.
Over the past decade, shares in NatWest have traded at barely half the average price of the bailout, delaying the government’s sale process as it tried to minimise taxpayer losses.
A NatWest spokesperson said: “Any decisions around share sales are a matter for the government. We welcome the government’s continued commitment to returning NatWest Group to private ownership and believe this is in the best interests of the bank and our shareholders.”
