Plans for a share sale in banking giant NatWest will be abandoned as they represent a “poor use of taxpayers’ money”, the new Chancellor of the Exchequer announced.
Rachel Reeves announced that the new Labour government has abandoned the Tories’ plans to sell their remaining 20 per cent stake in the bank in a “Tell Sid” style.
The former government had planned a NatWest share sale to private investors this summer, but it was put on hold due to the surprise announcement of the general election on 4 July.
Ms Reeves told the House of Commons: “We intend to fully divest our shareholding by 2025-26.
“But after taking appropriate advice, I have concluded that a retail share sale offer would involve significant discounts which could cost the taxpayer hundreds of millions of pounds.
“So it wouldn’t be worth the money.”
She added: “That’s not going to happen. That’s a poor use of taxpayers’ money and we’re not going to do it.”
The bank – formerly known as the Royal Bank of Scotland – was at one point 84 percent state-owned following a gigantic £46 billion bailout at the height of the financial crisis.
The Treasury has sold its stake in the bank, which includes Coutts, in order to return the company fully into private hands.
Taxpayers’ share in NatWest has fallen from around 38 percent in December to below 20 percent in recent weeks as the government continues to sell off its stake.
The previous Conservative government had announced that it would sell some of its shares to private investors, a share issue similar to British Gas’s ‘Tell Sid’ campaign in 1986, which encouraged the gas company to sell its shares to the public after it was privatised.
According to recent reports, Labour instead plans to sell its NatWest shares to large institutional investors as part of its aim to return the bank to full private hands by 2025/26.
Last week, NatWest said it had spent £24 million on the scrapped plans after being forced to pay for advertising and preparations for the share sale.
It is understood that some of the £24 million NatWest spent on the retail share plan’s marketing costs may be reused for general promotional purposes, although the bill also covers legal costs and expenses.
A NatWest Group spokesman said: “We welcome the Chancellor of the Exchequer’s commitment to return the NatWest Group to fully private ownership.
“This is a shared goal that we believe is in the best interests of both the bank and all of our shareholders.”
