NatWest Retail takeover bid in doubt after Labour win

(Bloomberg) — A proposed retail offering of government-held shares in NatWest Group Plc appears less likely after Britain’s change of power.

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This is according to British stockbroker Shore Capital Group Ltd. It says the new government may not be willing to persist with the idea floated by former Chancellor of the Exchequer Jeremy Hunt of increasing the current phased sales programme.

Hunt’s replacement, Labour’s Rachel Reeves, must now decide how best to exit a £6 billion ($7.7 billion) stake from the financial crisis era.

“I would say it is now unlikely that we will see a retail offering in the form that was previously discussed,” said Gary Greenwood, banking analyst at Shore Capital.

The taxpayer’s stake in NatWest has continued to decline this year due to gradual share sales by the Treasury and company-led share buybacks. The British government reduced its stake from 21.93% to 20.92% on June 24, according to a stock exchange filing.

“The stock is being sold at a reasonable pace, so there may not be a need to find a replacement,” Shore’s Greenwood added. “I also wonder whether Rachel Reeves will want to be seen as the one continuing what was essentially a conservative agenda.”

The former government said last year it was considering selling its stake in NatWest to retail investors as it sought to speed up its exit from the lender rescued during the 2008 financial crisis.

At the time, the government had become the majority shareholder in what was then the Royal Bank of Scotland, holding a 58% stake. By December 2009, the government’s total economic stake had increased to 84.9%.

While remaining its largest shareholder, the government is no longer considered a “majority shareholder” after its stake in the bank fell below 30% in March.

“We are pleased with the continued momentum in reducing the HM Treasury’s stake in the bank,” a NatWest spokesperson said in an email. “Returning the NatWest group to wholly private ownership remains a key ambition and we believe this is in the best interests of the bank and all our shareholders,” the spokesperson added.

NatWest declined to comment on the possibility of a retail offer. Bloomberg has contacted the Treasury for comment.

Another alternative for Keanu Reeves would be to sell shares to institutional investors. In March 2021, the government sold part of its stake in NatWest for £1.13 billion.

(Updated to show that the government increased its stake in 2009, in the eighth paragraph.)

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