UK Trims NatWest Shares (LON: NWG) | Stake Now Below 20% As Price Trades Near 5 Year Highs

In a significant move to further reduce its involvement with the banking sector since the 2008 financial crisis, the UK government, through UK Government Investments Ltd (UKGI), has sold a substantial block of shares in NatWest Group (LON: NWG).

This latest disposal has brought the government’s ownership in the bank below the 20% threshold, with a decrease from 20.92% to 19.97% following the sale of 6,645,166,452 shares. Natwest shares have outperformed the UK indices this year, with 46.5% gains through 2024 leaving the stock close to 5 year highs hit earlier this month.

This offloading is the latest in a series of disposals carried out by the government this year. It follows on from several other transactions completed last month, which saw the state's stake in the NatWest Group reduce from just under 26% at the end of May. The steady reduction of shares signals the government’s commitment to stepping back from the banking sector and returning the institutions to private ownership.

However, the government's broader plans for NatWest disposals have encountered a delay. It had been mooted that a retail offer would be presented, potentially giving the public a chance to purchase shares, but these plans have faced a setback. Due to Chancellor Rishi Sunak's call for a snap general election in May, it is reported that plans for the retail offer have been put “in the deep freeze.” This suggests that the initiative may not go ahead as soon or in the manner previously anticipated.

Aside from the NatWest share sale, the UK’s FTSE 100 faced a rocky start to the week. This market turbulence arose largely due to a sharp 15% drop in Burberry’s shares after the luxury fashion group announced the departure of its CEO, Jonathan Akeroyd. Burberry’s (LON: BRBY) decline played a significant role in influencing the FTSE 100’s overall performance, showcasing how pivotal events within prominent listed companies can directly impact broader market indices.

The continued sell-off of the government's NatWest stake represents ongoing efforts to distance the state from a sector it had heavily underpinned during the crisis. These sales are indicative of the government's approach to privatisation, gradually reducing public sector involvement in financial institutions.

It remains to be seen how the government will navigate the further reduction of its stake in NatWest and whether it will eventually pursue its initial retail offering ambitions post-election. Meanwhile, the wider market will continue to react not only to government actions but also to significant developments within its listed juggernauts like Burberry.