Investors in NatWest Group may soon receive bonus shares if they hold onto their stock, as part of a plan being finalized by the government this month. The Treasury is exploring options for a retail offer of NatWest shares worth billions of pounds, with a likely cap of £10,000 on applications from the public.
Chancellor Jeremy Hunt announced last year that a mass-market share sale was being considered to attract a new generation of retail investors. Since then, the government’s stake in NatWest has decreased to approximately 28%, valued at £7 billion. The retail offer will be launched alongside an institutional placing of shares, which could result in the Treasury’s stake falling to as low as 10%.
Sources indicate that if demand for shares is higher than expected, the government’s reduction in stake could be even greater. This could potentially bring NatWest closer to returning to full private ownership, 16 years after it was rescued from collapse with £45.5 billion of public funds.
To encourage widespread participation, the Treasury is considering a minimum investment of £250 and a cap of £10,000 for the retail offer. Additionally, for every ten shares purchased and held for at least a year, retail investors are expected to receive one bonus share. The final details, including the bonus share ratio and investment thresholds, are still subject to change.
A slight discount to NatWest’s current share price will also be applied to encourage investors to participate. Sources report that Chancellor Hunt and Prime Minister Rishi Sunak are closely involved in the decision-making process and an announcement on the launch of the offer could come as early as late May or early June, depending on market conditions.
The government’s decision will also take into account any potential political turbulence following this week’s local elections. Despite recent controversy surrounding the closure of accounts belonging to former UKIP leader Nigel Farage, NatWest’s share price has risen by over 20% in the past year. Dame Alison Rose, the bank’s former boss, stepped down last year after it was revealed that she had spoken to a BBC journalist about the closure of Mr. Farage’s accounts. She has since been replaced by Paul Thwaite, who was confirmed as NatWest’s permanent boss earlier this year. The bank also has a new chairman, Rick Haythornthwaite.
Mr. Farage has threatened legal action against the bank and has stated that his conflict with them is “far from over”. He believes that for a retail share sale to be successful, investors must have confidence in the bank and that until NatWest provides full disclosure and apologizes for their actions, customers may not trust them.
The government’s stake in NatWest has steadily decreased over the past eight years, from almost 85%. Earlier this year, it was revealed that M&C Saatchi, the advertising agency founded by the brothers who helped Margaret Thatcher come to power, had been enlisted to promote the sale of NatWest shares to millions of Britons.
NatWest, formerly known as Royal Bank of Scotland Group, was rescued from collapse by a government bailout. Its former boss, Fred Goodwin, described the bailout as “a drive-by shooting”. A spokesperson for NatWest stated that decisions regarding the timing and mechanics of the share offer are the responsibility of the Treasury.
