NatWest Nears Full Privatization Following Decade-Long Recovery
Natwest Shares Plummet Below Decade Peak in FTSE 100 Powerhouse
Shares for banking titan NatWest scaled a ten-year high on Thursday, as the government continued to divest its stake in the lender. The FTSE 100 heavyweight's stock surged close to 1% during mid-day trading, hitting peak levels of 498.8p.
Since the commencement of 2025, NatWest shares have soared an impressive 24%, with a staggering 50% growth over the past year. This upsurge took place as the government reduced its ownership to a mere 0.9%, with expectations of NatWest transitioning to full private ownership in the foreseeable future.
This dynamic was set in motion during the 2008 Financial Crisis, when the government infused £45.5bn into NatWest Group, then the Royal Bank of Scotland, after it required a bailout to remain afloat. Remnants of this period can still be seen in the stark contrast between the bank's current stock records and its pre-crisis share price high of 5236.28p.
A NatWest Group representative commented, "Our shared ambition with the government is to return the bank to full private ownership, a move we believe benefits all shareholders. We appreciate the progress the Treasury continues to achieve, having reduced its shareholding in the bank from nearly 40% in December 2023 to less than 1% today."
Factors Fueling NatWest's Growth
NatWest's growth can be attributed to several factors:
- Reeves' Stamp Duty Changes: Chancellor Rachel Reeves' modified stamp duty deadlines instigated a surge in profits for NatWest during Q1. The firm reported a pre-tax profit of £1.8bn, surpassing analyst estimations of £1.6bn. This boom was driven by a £3.4bn increase in net loans to customers, fueled by a rise in mortgage lending.
- Stamp Duty Adjustments: New stamp duty thresholds, implemented by Reeves, affected both main residences and first-time homebuyers. The zero rate thresholds for main residences dropped from £250,000 to £125,000, while first-time homebuyer thresholds fell from £425,000 to £300,000.
- Expanding Net Interest Margin: NatWest's net interest margin, a vital key performance indicator for bank profits, expanded by eight basis points from the end of 2024 to 2.27%.
- Economic Uncertainties: Although US President Donald Trump's tariff onslaught on 'Liberation Day' just missed Q1, NatWest, along with FTSE 100 peers HSBC, Barclays, and Lloyds, made provisions regarding expected credit loss. The firm increased expected credit loss by £100m to £3.5bn. NatWest retained post-model adjustments of £300m related to economic uncertainties, accounting for 8.7% of total impairment provisions.
This rapid growth and improvement in NatWest's financial standing culminate in the bank's imminent return to full private ownership, marking a momentous achievement nearly seventeen years after the 2008 financial crisis.
NatWest's transition to full private ownership is expected in the foreseeable future, following a remarkable increase in its share price since 2025. This growth can be attributed to several factors such as enhancements in personal-finance due to Reeves' stamp duty changes, the expansion of net interest margin in the banking sector, and adjustments to stamp duty thresholds for both main residences and first-time homebuyers. The Treasury's efforts to reduce its ownership in NatWest have played a significant role in this transformation.
