The government’s plan to offload its remaining stake in Natwest could be “dangerous” and lead to a flood of retail investors ramping up their exposure to a single stock, the chief of a FTSE 250 wealth manager has warned.
In an interview with City A.M., Steven Levin, the boss of London-listed money manager Quilter, slammed the government’s efforts to revitalise the stock market and said the sale of Natwest shares was too “isolated” to make a difference.
The comments come as the government prepares to offload its stake in the bank this summer in a bid to reignite a culture of retail investment in the UK.
Both the City minister and Chancellor have dubbed the sale a ‘Tell Sid’ moment for investment in the UK, in reference to the Thatcher-era advertising campaign around the privatisation of British Gas.
However, Levin said that efforts were misguided and could end up pushing investors away from the market.
“If you’re going to go and say, ‘we’re gonna sell Natwest and everyone buy it’, well actually, that in itself is dangerous, because there’s no diversification there,” Levin said.
“There will be a big rah rah in this country about ‘everyone’s going to have the opportunity to buy Natwest shares’. That is not the answer to the problem either. Because the thing is people should be realising they should be investing in a balanced portfolio of equities.”
The comments come amid uncertainty over whether the plans will go ahead this summer. Ministers offloaded a further chunk of shares in the bank in March, taking its stake in the bank below 30 per cent for the first time since a bailout in the wake of the financial crisis.
Natwest shareholders also backed a move to allow the bank to buy back more of its shares from government.
Under the government’s initial plans, retail investment platforms were going to be used to feed the shares into the market. However, City A.M. revealed the Treasury had paused a bidding process to handle the sale of shares, casting the sale into doubt.
A Treasury spokesperson told City A.M. that a retail offer of shares in Natwest would be “part of the government’s efforts to promote a savings investment culture and widen share ownership in the UK”.
“It will be for individual investors to decide if they want to take part in any potential offer and the government would of course comply with all relevant requirements for marketing any offer,” they added.