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(Alliance News) - The UK government on Thursday said it plans to sell a large part of its stake in lender NatWest Group PLC, in a trading plan managed by US investment bank Morgan Stanley.
Shares in FTSE 100-listed NatWest were down 1.5% in London on Thursday morning at 196.65 pence each. The bank's shares are up 17% in 2021 so far.
The Treasury currently owns 6.34 billion shares in the lender, via UK Government Investments, representing a 54.7% stake.
While the trading plan has been entered into on Thursday, the earliest that the sales will commence is August 12. The plan will run no later than August 11, 2022. The Treasury noted the plan allows Morgan "discretion to effect a measured and orderly sell down" of NatWest's shares on behalf of the government.
The Treasury has, however, put a cap on how many shares Morgan can sell on any given day. The investment bank is limited to selling no more than 15% of NatWest's daily traded volume, in an attempt to avoid flooding the market with NatWest shares.
"There is cap on the total number of shares that could be sold of 15% of the total number of NatWest Group shares being traded in the market over the 12 month duration of the plan," the Treasury explained.
As a result, the government is unable to say how many shares in total will be sold over the 12-month period.
NatWest has a GBP23 billion market cap, so 15% of its shares are worth about GBP3.5 billion, though all shares aren't traded on any one day. On Wednesday, 22 million NatWest shares were traded out of 11.57 billion total shares issued.
On the London Stock Exchange, NatWest's traded volume was 6.16 billion in 2020. Including other exchanges, it was 8.7 billion. Taking 15% of that figure is 1.3 billion shares, or a 11% stake.
The government has instructed Morgan not to sell unless the price "represents fair value and delivers value for money for the taxpayer" - as such, the government does not expect shares to be sold every day.
The Treasury said it will keep open other disposal options for its NatWest shares, including by way of share buybacks and accelerated bookbuilds, either or both of which could be launched during the term of the trading plan.
Goldman Sachs is the UK government's overall privatisation adviser to UKGI.
By Paul McGowan; paulmcgowan@alliancenews.com
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