Decision awaited

Labour urged to back £6.5bn NatWest shares sale

NatWest trades as RBS north of the border (pic: Terry Murden)

Sir Keir Starmer and Rachel Reeves should commit to the sale of the government’s stake in NatWest (RBS) as a way to raise a significant sum to fund their spending plans, says a stock market trading platform.

The Labour leaders and shadow chancellor have given no indication about whether the party would proceed with the process which was scheduled for June but postponed after Prime Minister Rishi Sunak called the general election for 4 July.

The government has been reducing its stake in what was Royal Bank of Scotland from a peak of 84% in 2008 when the bank was bailed out to save it from collapse.

Chancellor Jeremy Hunt indicated last November that he would launch a retail offer for the remaining shares that would evoke the “Tell Sid” campaign that the Conservative government used to sell shares in British Gas in the 1980s.

With Labour on course to form the next government, markets are awaiting a signal that it will go ahead with the sale of the stake in NatWest which stands at 26.95%. Selling the shares at a 10% discount to today’s market price would raise around £6.5 billion.

Since January, NatWest’s shares have soared by about 40%, providing some further encouragement for buyers. One source said the stake could be reduced to about 17% soon after the election on 4 July.

Dan Coatsworth, investment analyst at AJ Bell, says that abandoning the sale altogether would be a ‘missed opportunity’ to encourage more people to invest for the long term

“The government offering its NatWest shares below market price could have encouraged more people to buy shares for the first time,” he says.

“It is not clear whether the Labour Party would proceed with a similar offer if they won the election but if Keir Starmer and Rachel Reeves end up at the helm of the next government, it is vital they revisit the potential sale.

“It could also be a straightforward way to raise a significant amount of money.”

Contracts had been awarded to a number of organisations to support the retail offer, including to public relations teams at Lexington and Teneo, worth £390,000, and advertising firm M&C Saatchi, worth £2 million. Financial advisers at Goldman Sachs and Barclays were also retained.

NatWest had drawn up a prospectus to set out the financial information that would have been sent to the public to help them decide whether to buy shares.

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