UK extends trading plan to sell NatWest stake by two years

By Iain Withers and Simon Jessop

LONDON (Reuters) - The British government has extended a trading plan to help cut the taxpayer's stake in NatWest by another two years, as it chips away at its remaining 41.5% holding with small sales after a recent bout of global banking volatility.

A series of sales returned the bank - which was bailed out at the height of the 2007-09 global financial crisis - to majority private ownership last year.

The trading plan involves drip-feeding further stock into the market and is one of the government's main methods of reducing its stake.

The government said it would only consider sales of bigger chunks to private investors, or directly to NatWest, when they "achieve value for money for taxpayers".

Investor confidence in the wider banking sector has been shaken in recent weeks by the collapse of U.S. tech lender Silicon Valley Bank and the emergency rescue of Swiss giant Credit Suisse, hitting banking stocks globally.

NatWest's stock has fallen nearly 10% over the past month, but remains about flat on the start of the year. The bank's stock was up 1.3% in early trading on Monday.

The lender bought 1 billion pound-plus ($1.23 billion-plus) blocks of stock directly back from the government in both March 2021 and 2022, but has not yet done anything similar this year.

When asked for comment, NatWest pointed to its annual report in February that said it had the capacity to do more directed buybacks in future.

Britain's finance ministry said on Monday its trading plan had been extended to Aug. 11, 2025 and would continue to be run by investment bank Morgan Stanley.

Under the plan, the government can sell up to 15% of its stake in the company over the two-year period.

It has been extended for a second time, after originally being launched in 2021.

Around 3.7 billion pounds has been raised by selling shares under the plan to date, the finance ministry added.

Each sale so far has been far below the government’s bailout price and have crystallised losses for taxpayers, although the government had long argued the rescue was needed and it is unrealistic to expect a profit.

The government reaffirmed its commitment to fully privatising NatWest by 2026 in its budget last month.

($1 = 0.8119 pounds)

(Reporting by Simon Jessop and Iain Withers; Editing by Bernadette Baum and Sharon Singleton)