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Finance Minister Jeremy Hunt Plans NatWest Share Sale to Public within 12 Months

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UK Government Considers NatWest Share Offer to Public in Effort to Reduce Stake

The UK government is considering the possibility of a NatWest share offer to the public within the next year, according to finance minister Jeremy Hunt. The move comes as part of the government’s ongoing efforts to reduce its stake in NatWest, which it acquired during the 2008-2009 global financial crisis. Despite returning the bank to majority private control last year through a series of stock sales to institutional investors, the government still holds around 39% of the bank.

Hunt stated, “I will explore options for a NatWest retail share offer in the next 12 months subject to supportive market conditions and achieving value for money.” This plan is part of a broader initiative to reinvigorate interest in UK stocks, with Hunt adding that it is “time to get Sid investing again.” The reference to “Sid” alludes to the successful “Tell Sid” advertising campaign in the 1980s, which encouraged ordinary Britons to invest in the privatisations of state-owned companies.

While NatWest said that decisions about share sales are in the government’s hands, the bank welcomed the commitment to returning it to private ownership. However, the bank’s shares dipped following Hunt’s comments, falling 1.3% to 204.4 pence, compared to a 0.2% decline in the FTSE 100 index.

The share sale plan comes at a challenging time for NatWest, which has faced a tumultuous year, including a highly publicized dispute with former Brexit party leader Nigel Farage over the closure of his bank accounts. This incident resulted in a political backlash and ultimately led to the departure of the bank’s CEO, Alison Rose. NatWest’s stock has been the worst performing among FTSE 100 British banks this year, with a decline of over 20%, according to Eikon data.

It is almost certain that the government will incur a significant loss on the £45 billion ($56.07 billion) rescue of NatWest, as the bank’s shares are currently far below the bailout level of 502 pence per share.

The UK government’s last major attempt to attract retail investors to the stock market occurred in 2013 with the listing of Royal Mail. The initial public offering (IPO) generated immense interest, being oversubscribed over 20 times and resulting in a nearly 40% surge in share prices at market debut. However, the investment eventually turned sour for many, with shares in the renamed holding company International Distributions Service now worth 25% less than the initial offer price of 330 pence.

The government’s decision regarding the NatWest share offer will depend on market conditions and the potential for achieving value for money. With the goal of reducing its stake and stimulating interest in UK stocks, the government is considering a strategy that echoes the successful privatization campaigns of the 1980s. However, given the challenging state of NatWest and the potential for losses, careful consideration and planning will be required to ensure a successful outcome for both the government and potential retail investors.

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