In key news on UK stocks, the British government has ceded its controlling stake in NatWest Group (GB:NWG) as part of its plan to fully return holdings in the bank to private ownership. Through a share sale executed on March 22, the Treasury’s stake in NatWest has now reduced to 29.82% from 30.98%. With the stake now below the 30% mark, the UK government is no longer a controlling shareholder as per the country’s listing rules.
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UK Government’s Plan to Divest its Natwest Stake
The UK government gained an 84% stake in Natwest (previously called Royal Bank of Scotland) when it rescued the bank via a £46bn bailout at the peak of the 2008 financial crisis. Over the recent years, the government has been lowering its stake by divesting blocks of shares to institutional investors.
At the end of 2023, the Treasury had 37.98% stake in NWG, down from 62% in 2018. The government intends to fully privatize the Group by 2026. Moreover, it is considering selling a substantial portion of its holdings to retail investors as part of its initiatives to boost the capital markets activity in the country.
Meanwhile, NatWest’s spokesperson cheered the government’s continued efforts to return the bank to private ownership, saying the move is “in the best interests of the bank and our shareholders.”
Recently, NatWest urged investors to back a resolution that would allow it to buy back up to 15% of its shares from the government over a 12-month tenure, raising the limit from 5% a year. If this resolution is approved at the upcoming annual shareholder meeting in April, it will accelerate the bank’s privatization.
It is worth noting that the UK government still holds 10.44 billion NWG shares and remains the largest single shareholder.
What is the Price Target for NatWest Group?
Last month, NatWest impressed investors with solid Q4 profits. Analysts are cautiously optimistic about NWG stock, with a Moderate Buy consensus rating based on six Buys, two Holds, and two Sells.
The average NatWest Group share price target of 273.33p implies 5.4% upside potential. Shares have rallied nearly 24% year-to-date.
