Treasury sells another £1bn in Natwest shares as stake falls further

Natwest has bought back another tranche of shares from the Treasury as the government continues to accelerate its exit from the Big Four lender.

In a statement to the market this morning, the FTSE 100 bank confirmed that it had purchased 263m shares at a price of 380.8p per share, bringing the total value of the transactions to £1bn.

The shares represent 3.16 per cent of Natwest’s issued share capital. Following the deal, the government’s stake in the lender has fallen to around 11.4 per cent.

The latest sale comes as part of a push by the government to return the bank to private hands by as early as next year, with Natwest ramping up its repurchase of stock from the state.

Natwest has now made five deals to buy back its shares since 2021, including two this year alone. Its stock price has been on a tear in 2024, surging 76 per cent in the year to date after installing a new management team and delivering healthy earnings.

Despite currently trading at a nine-year high of 387p, the taxpayer has still incurred a loss from the government’s bailout of the bank, which saw it take an 84 per cent stake for an average price of 502p per share during the financial crisis.

Paul Thwaite, Natwest’s chief executive, said on Monday that the buyback was “a result of Natwest Group’s continued strong performance”.

“This transaction represents another important milestone on the path to full privatisation,” he added.

“We believe it is a positive use of capital for the bank and for our shareholders, and we are pleased with the sustained momentum in reducing HM Treasury’s stake in Natwest Group throughout this year.”

After consulting with shareholders earlier this year, Natwest won permission to buy back bigger tranches of shares from the government and has since sped up its repurchase programme.

The government’s stake has dropped more than a quarter since January, also thanks to an ongoing trading plan run by Morgan Stanley.

In July, the newly-elected Labour government scrapped a plan developed by the Conservatives to offer part of the Treasury’s stake to the general public, flagging “significant discounts that could cost taxpayers hundreds of millions of pounds”.

The government has committed to returning Natwest to private ownership by 2025 or 2026.

Gary Greenwood, an analyst at Shore Capital, said he assumes the Treasury will fully privatise the bank “by the middle of next year or possibly sooner”.

“This directed share buyback has come a little sooner than we expected and so brings forward the likely point at which the government will have fully exited its shareholding,” he added.