U.K. Government Cancels Retail Sale of Its 20% NatWest Stake — Update

By Cristina Gallardo

The U.K. government dropped plans set out by the previous administration for a retail sale of its remaining stake in NatWest Group, the bank it rescued at the height of the 2008-09 financial crisis.

U.K. Treasury Chief Rachel Reeves told the House of Commons Tuesday that the new Labour government decided to cancel the retail sale of its nearly 20% stake in NatWest. Instead, it will sell it privately in 2025, she said.

The government bailed out the lender during the financial crisis and has been trimming its stake down as part of a plan to return it to private ownership in the coming years. Reeves said the government still intends to exit its shareholding by 2026.

Reeves justified the change of plans by saying the government needed to take a series of measures to address an overspend of 22 billion pounds ($28.31 billion) inherited from the previous Conservative government.

A retail share would have meant offering the public discounts worth hundreds of millions of pounds, she said.

"It would therefore not represent value for money, and it will not go ahead," Reeves said.

The share sale had been due to launch in the summer under former Treasury Chief Chancellor Jeremy Hunt, but the announcement of the snap U.K. general election on July 4 put it on hold.

NatWest booked a GBP24 million charge in its accounts attributed to the planned retail share sale.

A spokesperson for NatWest said the lender was "pleased with the continued reduction of the government's stake," which has almost halved this year and was at 19.97% as of July 15.

"We welcome the Chancellor's commitment to returning NatWest Group to full private ownership. This is a shared ambition that we believe is in the best interests of both the bank and all our shareholders," the spokesperson said.

The government has three main options on the table to reduce its stake further: a trading plan, selling shares to institutional investors, or a directed buyback. NatWest has already bought back 4.5% this year and has permission from shareholders to increase this up to 15%.

Elsewhere in her statement to MPs, Reeves said the Treasury aims to save GBP5.5 billion this year and GBP8.1 billion next year to tackle the overspend. Full fiscal plans will be set alongside the government's spending review at the budget on Oct. 30, she said.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

(END) Dow Jones Newswires

July 29, 2024 12:15 ET (16:15 GMT)

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