NatWest has moved another step closer to complete privatisation after purchasing £1 billion worth of its shares from the British government, reducing the state's ownership to 11.4 per cent from around 14.2 per cent.

The transaction, which involved the purchase of 262.6 million shares at approximately £3.81 per share, marks the second directed buyback within a 12-month period. Combined with other share sales throughout 2024, the government's stake has fallen dramatically from about 38% at the end of December 2023.

Paul Thwaite, chief executive officer of NatWest Group, said: "This transaction represents another important milestone on the path to full privatisation. We believe it is a positive use of capital for the bank and for our shareholders, and we are pleased with the sustained momentum in reducing HM Treasury's stake in NatWest Group throughout this year."

The latest buyback follows significant changes to listing rules earlier this year, which removed the previous 5% cap on annual share buybacks. NatWest shareholders had approved a plan allowing the bank to increase its directed share buyback limit to 15 per cent.

The government has now recouped more than £20 billion from share sales since the £46 billion bailout in 2008, when the Treasury stepped in to prevent the then Royal Bank of Scotland from collapsing. At its peak, the government owned 84 per cent of the bank.

The privatisation strategy has shifted since Labour's election victory. The new government has abandoned previous Conservative plans for a retail share sale that would have targeted individual investors. The cancelled campaign, which featured newsreader Trevor McDonald, left NatWest with costs of £24 million.

Instead, the Treasury now aims to sell its remaining stake by 2025 or 2026 through various disposal methods, subject to market conditions and value considerations. NatWest's shares have risen nearly 20 per cent since Labour's election victory in early July.

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