The UK government has shown a rare sign of financial deftness by selling a £1 billion stake in NatWest following a rally in the bank’s shares appreciated in recent months.
UK Government Investments Limited sold £1 billion of NatWest shares at 380.6p, bringing its stake down to 11.4%.
The new Labour government unleashed a tax raid on businesses and investors to fund spending increases, and although the £1 billion will hardly touch the side of the ‘black hole’ supposedly left by the conservatives, it does demonstrate a semble of financial markets nous.
“The government has taken advantage of NatWest’s share price having just traded at its highest level in nine years to offload a £1 billion stake in the bank,” said AJ Bell investment director Russ Mould.
“Rachel Reeves is vindicated in her decision in July to scrap a ‘Tell Sid’ public offer of the government’s remaining stake in NatWest. Ditching the share sale was one of the first things she did after Labour won the general election, saying it was ‘a bad use of taxpayers’ money’ as the initiative – created by the previous government – was expected to offer the shares at a potentially large discount to the market price to incentivise take-up by the public.
“By sitting tight and waiting for the market to strengthen, and restricting the sale to institutional investors, Reeves has so far managed to get a better price for the shares. Whether that trend continues remains to be seen.”