UPDATE 2-UK government kicks off NatWest share sale

(Adds background on NatWest)

By Iain Withers

LONDON, May 10 (Reuters) - The British government kicked off
the sale of a further stake in taxpayer-backed NatWest Group
, edging it a step closer to private ownership more than
a decade since its rescue in the financial crisis.

The Treasury said it plans to sell around 580 million
shares, amounting to a 5% stake, reducing its ownership to 55%.

NatWest has remained majority state-owned following a 45
billion-pound ($63.65 billion) bailout in 2008. The government's
last sale of stock to outside investors was in 2018.

UK Government Investments (UKGI), which manages the NatWest
stake, said final pricing was still to be determined through an
accelerated bookbuilding process. Final details will be
announced on Tuesday when markets open.

NatWest declined to comment.

Sky News reported earlier on Monday that the share sale was
imminent, sending shares in the bank down 1.5% to close at 197.1
pence, after earlier being up around 2% on the day.

Despite the dip, NatWest's stock price has more than doubled
since hitting a low of 90.5 pence in September, as optimism has
built about prospects for Britain's economic recovery from the
coronavirus pandemic.

The sale will nonetheless crystallise a further hefty loss
for taxpayers, with shares well below the 502 pence bailout
level. Shares are also below the 2018 sale price of 271 pence a
share.

NatWest, formerly Royal Bank of Scotland, has long argued it
is unrealistic to expect a profit on the bank's rescue, which
was needed to stabilise Britain's financial system.

The bookrunners on the sale are Barclays, Citigroup
, Goldman Sachs and Morgan Stanley.
Rothschild & Co is acting as adviser to UKGI.

NatWest paid 1.1 billion pounds last month to directly buy
back stock from the government, reducing the government's stake
from 62% to 60%.

Two months ago, Britain's financial regulator said it had
started a criminal action against NatWest over allegations it
failed to detect suspicious activity by a customer depositing
nearly 400 million pounds over five years, mostly in cash.

($1 = 0.7070 pound)
(Reporting by Iain Withers in London
Editing by Matthew Lewis and Grant McCool)