In a significant milestone for one of Britain's largest banks, the government's shareholding in NatWest has fallen below 20 per cent, marking a crucial step towards the lender's full return to private ownership.

NatWest, formerly known as Royal Bank of Scotland, announced on Monday that the state's ownership had decreased to 19.97 per cent. This reduction comes as a result of the bank's share buyback programme and the government's ongoing sale of shares in the open market.

The development represents a dramatic shift from December, when the government held nearly 38 per cent of the bank. This substantial stake was a legacy of the 2008 financial crisis, during which NatWest received a taxpayer-funded bailout to prevent its collapse.

Paul Thwaite, NatWest's Chief Executive Officer, expressed enthusiasm about the latest development, stating, "Returning NatWest Group to full private ownership remains a key ambition and we believe it is in the best interests of both the bank and all our shareholders."

The reduction in government ownership below the 20 per cent threshold carries additional significance for NatWest. After a one-year period, Britain's finance ministry will no longer be considered a related party to the bank, potentially easing some administrative burdens that have been in place since the bailout.

While the previous Conservative government had proposed accelerating NatWest's return to private hands through a one-off share sale to the public, the new Labour administration has indicated it may not proceed with this specific plan. However, Labour has affirmed its commitment to the overall objective of ending state ownership of the bank.

The gradual reduction of the government's stake in NatWest reflects the ongoing efforts to normalise the UK banking sector in the aftermath of the global financial crisis. As the bank continues its journey towards full privatisation, investors and analysts will be closely watching its performance and the government's strategy for divesting its remaining shares.

With NatWest's share price and financial performance showing signs of improvement in recent years, the bank appears to be on a steady path to reclaiming its status as a fully private entity, more than 15 years after its dramatic rescue by the British taxpayer.

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