NatWest share sale plan on hold after election called

NatWest was trading lower on Thursday following reports that plans for a sale of shares in the bank to the general public have been put on hold after Prime Minister Rishi Sunak called a general election for 4 July.

Sky News reported late on Wednesday that plans for a multibillion pound mass market sale of the government’s stake in the bank had been derailed by the PM’s decision to call a summer general election.

Sky said a proposed retail offer of shares in the taxpayer-backed bank would be scuppered by the timing of the poll.

The Treasury has been preparing for months for a retail offering, with several billion pounds-worth of NatWest shares to be offloaded at a discount to the prevailing market price. Under the government's plans, it would have taken place alongside an institutional placing of shares, with taxpayers' stake to be reduced to as little as 10% after the combined sale.

However, sources told Sky the retail offer was "now in the deep freeze".

Reuters also cited people familiar with the matter as saying that the government was poised to scrap the share sale.

At 1300 BST, NatWest shares were down 1.7% at 308.10p.

Broker Shore Capital, which has a ‘hold’ rating on the shares, said that "in the seemingly unlikely event that the Conservative Party is re-elected", it would expect a "rapid thaw" and for such plans to be swiftly reintroduced.

"However, should the Labour Party come to power, as widely anticipated, then such plans are likely to be revisited and possibly amended. That said, whoever wins the Election will still be looking to reduce and ultimately exit the Government’s stake in NatWest, in our view, so the sell down is still likely to continue in one form or another," said analyst Gary Greenwood.

"In the meantime, we expect NatWest to enact a directed buyback of the Government’s stake equivalent to up to 5% of its total share capital. Ultimately, the current Government has committed to exiting the stake in NatWest, which stands at circa 27%, by 2025/26, and we think any new Government, whether it be Conservative or Labour, is likely to want to stick to this broad timeframe."