The Treasury’s stake in NatWest is likely to fall below 20% next week, another milestone in the bank’s return to full private ownership, Sky News has learned.
The government’s sale of its stake in NatWest Group will reach a new milestone in the coming days when it falls below the threshold that would see the Treasury treated as a related party under listing rules.
Sky News can reveal that the taxpayer’s stake in the major lender is likely to be cut to below 20% next week – and possibly on general election day.
Under proposed changes to UK listing rules, expected to be adopted later this year, the classification of related parties will be increased from 10% of shares to 20%.
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If this level were to be reached, the related party clause would enter into force exactly one year later. This would mean that NatWest has reached a new milestone on its way back to full private ownership.
Once the Treasury is no longer categorized as a related party under the listing rules, this would reduce the administrative burden on the bank, according to Whitehall insiders.
The government’s stake in NatWest, once more than 80%, has been steadily reduced in recent months through a trading plan that has seen the Treasury’s stake trickle into the market.
In addition, NatWest has used excess capital to buy back shares from the state, further reducing its stake.
A spokesman for the bank declined to comment on the prospect of government interest rates falling below 20%, but said: “We are pleased with the recent momentum in the reduction of HM Treasury’s stake in the bank.
“It is our shared ambition to return NatWest Group to private ownership and we believe this is in the best interests of both the bank and all our shareholders.”
The continued decline in government interest in NatWest comes weeks after the timing of the election derailed plans for a multibillion-pound retail offering of its stake in NatWest.
Under the plans, ordinary investors would get “bonus” shares in the bank if they held the shares they acquired as part of the offering.
The Labour Party has not yet formally indicated whether it will continue with the plan if the next government is formed.
A combined retail and institutional placement would put ministers within striking distance of returning NatWest to full private ownership, 16 years after it was brought back from the brink by £45.5 billion of public money.
Under Paul Thwaite, whose transition from interim to permanent boss of NatWest was confirmed earlier this year, it has struck a deal to acquire the majority of Sainsbury’s Bank and struck an optimistic tone about its prospects.
NatWest also has a new chairman, Rick Haythornthwaite, who replaced Sir Howard Davies at the annual meeting earlier this year.
However, the bank still faces a potential legal challenge from Reform Party leader Nigel Farage, who was controversially ‘debanked’ by the bank last year.
The ensuing row cost Dame Alison Rose, Mr Thwaite’s predecessor, her job.
NatWest, which changed its name from Royal Bank of Scotland Group in a bid to distance itself from its arrogant over-expansion, was saved from outright collapse by an emergency rescue operation that Fred Goodwin, its then boss, likened to “a drive-by shooting”.
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In March, the Treasury ceased to be NatWest’s controlling shareholder as it fell below a key 30% threshold.
The government previously said it had committed to abandoning the pyre by 2025.
Rachel Reeves, the shadow Chancellor of the Exchequer, said Labor still supported the plan to sell the government’s stake in the bank as long as it still delivered value for money.