NatWest Stake Drops Below 1% – Market Watchers Take Note

Contractors, a major shift in UK banking just happened. The government has reduced its stake in NatWest to under 1%, signalling the near-end of state ownership. With privatisation now within reach, changes could follow in how banks operate and lend — especially to non-traditional borrowers like contractors. Contractors, a major shift in UK banking just happened. The government has reduced its stake in NatWest to under 1%, signalling the near-end of state ownership. With privatisation now within reach, changes could follow in how banks operate and lend — especially to non-traditional borrowers like contractors.

The Treasury has confirmed it sold another block of NatWest shares, dropping its stake from 1.98% to 0.90%, according to a stock market filing. This brings the state’s holding to its lowest level since the 2008 financial crisis rescue, when taxpayers took an 84% stake to save the bank with £45.5 billion of public funds. The move is part of Chancellor Rachel Reeves’ pledge to fully exit NatWest by the 2025–26 tax year. Since December alone, the government’s holding has fallen by more than two-thirds. While previous plans included a public share sale campaign featuring Sir Trevor McDonald, the Labour government scrapped that idea in September, citing poor value for taxpayers. Instead, shares are being sold gradually to institutional investors.

As NatWest transitions back into full private ownership, contractors could see subtle but important shifts in how banks make lending decisions. With less state oversight, lenders like NatWest may adjust their appetite for risk — potentially affecting how they assess income from short-term contracts or day rates. Milestones already hit include the government dropping below 30% ownership last March — ending its “controlling shareholder” status — and below 20% in July, meaning less regulatory scrutiny as a “related party”. This latest reduction continues the trend and may signal more independence in pricing and lending policy. For contractors, that could mean more product diversity — or tighter rules, depending on how NatWest and others interpret the market.