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UK government no longer a controlling shareholder in Natwest after share sale

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The UK government has relinquished its status as a controlling shareholder in Natwest after reducing its stake to below 30 per cent.

Natwest, formerly known as the Royal Bank of Scotland, disclosed in a stock market filing that the Treasury’s stake had fallen to 29.82 per cent on March 22nd through its daily trading plan.

This reduction below the 30 per cent threshold means that the Treasury is no longer considered a “controlling shareholder,” relieving the government of additional legal and regulatory obligations, such as requiring two votes on director appointments.

During the financial crisis in 2008, the government acquired an 84 per cent stake in Natwest to rescue it, paying £45.5bn for the bailout at an average price of 502p per share. However, taxpayers have incurred losses as Natwest’s share price has declined by half since then. To date, the Treasury has recouped approximately £14.5bn from its share sales, including £5.8bn from its trading plan initiated in August 2021.

The government aims to fully privatize Natwest by 2026 and plans to offer part of its remaining stake to retail investors, possibly as early as June, as part of broader efforts to enhance UK capital markets activity.

Natwest is also authorized to repurchase its shares from the Treasury, having done so three times since 2021, with the next eligibility for a deal in May. The bank has proposed increasing the amount it can repurchase from the Treasury annually, from 4.99 per cent to up to 15 per cent, in anticipation of new listing rules by the Financial Conduct Authority intended to stimulate interest in London’s stock market.

A spokesperson for Natwest expressed support for the government’s commitment to returning the bank to private ownership, emphasizing that it aligns with the best interests of the bank and its shareholders. City minister Bim Afolami characterized the milestone as excellent progress toward fully privatizing Natwest, anticipating a potential retail offering of Natwest shares in the summer, contingent upon market conditions and value for money.

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