By Samantha Jones
The planned sale of shares in NatWest to the general public is now uncertain following Prime Minister Rishi Sunak’s unexpected call for a general election on Wednesday night, analysts warn.
The election, scheduled for July 4, has already caused shares in NatWest to drop on Thursday morning, with fears that the timing could delay the highly anticipated retail share offer.
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The Government has been aiming to fully divest its ownership of the taxpayer-backed bank, which was bailed out during the 2008 financial crisis, by 2025-2026.
Chancellor Jeremy Hunt had revealed plans to start selling the Government’s stake to ordinary investors as early as this summer, with the Government currently holding about 27% of the bank’s shares.
However, the election announcement has thrown these plans into disarray. Analysts Robert Sage and Stuart Duncan from investment bank Peel Hunt noted that the share sale cannot take place before the election.
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They added that the new government, which polls suggest may be led by the Labour Party, could potentially decide not to proceed with the initiative.
“This share sale cannot take place before the General Election and the new government, which polls are currently suggesting is likely to be formed by the Labour Party, may or may not proceed with this initiative,” Sage and Duncan stated.
Labour currently holds a 20-point lead over the Conservatives in opinion polls, making a change in government highly probable.
Gary Greenwood, an analyst for Shore Capital Markets, echoed these concerns, stating that if Labour comes to power, the plans for the NatWest share sale are likely to be revisited and possibly amended.
“In the seemingly unlikely event that the Conservative Party is re-elected, we would expect a rapid thaw and for such plans to be swiftly reintroduced. However, should the Labour Party come to power, as widely anticipated, then such plans are likely to be revisited and possibly amended,” Greenwood explained.
Despite the political uncertainty, Greenwood suggested that any government would ultimately want to reduce and eventually exit its shareholding in NatWest.
Last month, NatWest’s chairman Rick Haythornthwaite emphasized that returning the bank to private ownership would mark the end of a “sorry tale” for both the UK and the bank.
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