The government’s plan to sell its remaining stake in Natwest could be “dangerous” and lead to a flood of retail investors increasing their exposure to a single stock, the head of a FTSE 250-listed asset manager has warned.
In an interview with City AMSteven Levin, head of London-listed asset manager Quilter, sharply criticised the government’s efforts to revive the stock market and said the sale of Natwest shares was too “isolated” to make a difference.
The comments come as the government prepares to sell its stake in the bank this summer in a bid to reignite a culture of private investment in the UK.
Both the City Minister and the Chancellor of the Exchequer described the sale as a “Tell Sid” moment for investment in the UK, referring to the Thatcher-era publicity campaign to privatise British Gas.
However, Levin said these efforts were misguided and could ultimately cause investors to turn away from the market.
“If you go and say, ‘We’re selling Natwest and everyone’s buying it,’ that in itself is dangerous because there’s no diversification happening,” Levin said.
“There will be a big fuss in this country about ‘everyone will be able to buy Natwest shares’. That is not the solution to the problem either. People should realise that they should invest in a balanced portfolio of shares.”
The comments come amid uncertainty over whether the plans will go ahead this summer. In March, ministers sold another portion of their shares in the bank, taking their stake in the bank below 30 percent for the first time since a bailout package in the wake of the financial crisis.
Natwest shareholders also backed a move to allow the bank to buy back more of its shares from the government.
According to the government’s original plans, the shares were to be brought to market via private investment platforms. City AM. announced that the Treasury Department had suspended a bidding process to complete the share sale, putting the sale in doubt.
A spokesman for the Ministry of Finance said City AM that a private offering of Natwest shares was “part of the Government’s efforts to encourage a culture of savings and increase share ownership in the UK”.
“The decision as to whether a potential investor wishes to participate in such an offering rests with the individual investor. The Government will of course comply with all relevant requirements for the marketing of any offering,” they added.
