SCHEDULE 13D/A: UK Government Further Reduces NatWest Group Stake to 6.98% Under Ongoing Divestment Plan

HM Treasury and UK Government Investments Limited have announced a further reduction in their beneficial ownership of NatWest Group plc, decreasing their stake to 6.98% as part of an ongoing, pre-announced trading plan.

Summary

• HM Treasury and UK Government Investments Limited (UKGI) have reduced their beneficial ownership in NatWest Group plc.
• Their stake now stands at 6.98% of the ordinary shares, totaling 2,251,068,500 shares.
• This represents a decrease from the previously reported 7.98% stake.
• The reduction involved the disposal of 79,844,067 ordinary shares since the last TR-1 notification on January 28, 2025.
• This divestment is part of a pre-announced trading plan by HM Treasury, initially announced on July 22, 2021, and most recently extended on April 3, 2023.
• UKGI, a company wholly-owned by HM Treasury, is entitled to exercise control over these voting rights.

Sentiment

Score: 6

Explanation: The announcement reflects a planned and ongoing divestment by the UK government, which is generally viewed as a positive step towards full privatization for NatWest. The event is expected and part of a long-term strategy, leading to a neutral to slightly positive sentiment.

Positives

• The continued reduction of the UK government's stake moves NatWest closer to full private ownership, which can be viewed positively by the market as it removes perceived government interference and aligns the bank more closely with private sector norms.
• The divestment is part of a pre-announced and extended trading plan, indicating a structured and predictable approach to reducing the government's holding, which minimizes market surprise.

Future Outlook

The filing indicates that the UK government's reduction of its stake in NatWest Group plc is an ongoing process, part of a trading plan announced in 2021 and extended in 2023, suggesting further divestments are anticipated.

Management Comments

• "UK Government Investments Limited, a company wholly-owned by His Majesty's Treasury, is entitled to exercise control over the voting rights which are the subject of this notification (pursuant to certain management arrangements agreed with His Majesty's Treasury)."
• "The Solicitor for the Affairs of His Majesty's Treasury is acting as nominee for The Commissioners of His Majesty's Treasury (HMT)."
• "The percentage of voting rights held by HMT in NatWest Group plc (NWG), as shown on this form (6.98%), has been calculated following the disposal by HMT of 79,844,067 ordinary shares in NWG since its last TR-1 notification on 28 January 2025, under HMT's trading plan announced on 22 July 2021 and most recently extended on 3 April 2023."

Industry Context

This divestment aligns with the broader trend of governments reducing their stakes in financial institutions that received state aid during the 2008 global financial crisis. It signifies a continued move towards full privatization for NatWest, a process seen across various European banks that were partially nationalized.

Comparison to Industry Standards

• This document primarily concerns a change in a major shareholder's stake rather than operational or financial performance, so direct comparisons to industry financial benchmarks or specific company projects are not applicable.
• The divestment itself is consistent with the long-term strategy of the UK government to exit its ownership of NatWest, a process that has parallels with other European governments divesting from banks they recapitalized.

Stakeholder Impact

• Shareholders: The reduction in government ownership may increase the free float of shares and potentially lead to a more market-driven valuation, removing the "government-owned" discount.
• Management: Continued reduction of government influence may provide greater operational autonomy.

Next Steps

• Continued execution of HM Treasury's trading plan for further divestment of NatWest Group plc shares.

Key Dates

Recommendation

Keywords

NatWest Group, HM Treasury, UK Government Investments, Shareholding, Divestment, Privatization, Banking, Financial Services, Schedule 13D, TR-1