Government sells another £1bn in NatWest shares as full privatisation edges closer

The UK government’s stake in NatWest has fallen to just over 11% after the high-street bank bought back £1 billion of shares from the Treasury.

The move means NatWest continues to edge closer to full privatisation and comes after chancellor Rachel Reeves abandoned plans to sell the government’s remaining stake in NatWest to the public.

The government and the bank said on Monday that the Treasury’s holding will drop from 14.2% to 11.4% due to the share sale.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Paul Thwaite, the NatWest chief executive, said: “As a result of NatWest group’s continued strong performance, we are pleased to have today completed our second buy-back of government shares of 2024, further reducing HM Treasury’s shareholding."

What is happening with NatWest’s share price?

The bank’s share price has almost doubled over the past 12 months. At the end of last month, it rose by just shy of 5% on the day it revealed its operating profits were £200 million higher than expected during the third quarter.

The banking group said it made an operating pre-tax profit of £1.7 billion between July and September, nearly a third higher than the £1.3 billion generated during the same period last year. Analysts were forecasting profits of £1.5 billion.

The increase was partly driven by an increase in lending and the amount of money customers deposited with the bank.

The results sent shares in the bank to their highest levels since 2015.

Thwaite said at the time: “The strength of NatWest Group’s performance is underpinned by the support we provide to our 19 million customers in every nation and region of the UK.

“Throughout the third quarter of 2024, we have grown our lending, helping customers to buy or remortgage their homes or to start and grow their businesses. With customer activity increasing… and defaults remaining low, we are well placed to succeed with our customers and for our shareholders in the months and years ahead.”

Why did NatWest ditch its public share sale?

Reeves abandoned plans to sell the government’s remaining stake in NatWest to the public in July, saying it would not “represent value for money”.

The Labour chancellor said that a retail share sale of the bank would now not happen as it would have meant having to offer the public discounts worth hundreds of millions of pounds, which would be damaging for taxpayers.

At one stage, NatWest was 84% owned by the state after a £46 billion bailout at the height of the financial crisis.

A public sale would "not represent value for money, and it will not go ahead", Reeves told MPs as part of a statement on public finances. She added: “It’s a bad use of taxpayer money and we will not do it."

Sarah Coles, head of personal finance at Hargreaves Lansdown, said at the time: “The news that retail investors will be frozen out as NatWest shares are sold off is bitterly disappointing. Retail investors are all too often overlooked and yet they are important backers of UK companies, holding a greater proportion of their assets in the UK compared to the likes of pension funds.”