The UK Government has sold £1.26 billion of its stake in Natwest back to the banking firm.

It is the latest in a series of stake sales by UK Government Investments as the state seeks to whittle down its shareholding in the bank, following its near £46 billion bailout during the 2008 financial crisis.

The latest sale will bring the Government’s minority stake down to 38.69% from around 41%.

The shares were sold to the bank at Friday’s closing price of 268.4p each, giving the firm a current market value of around £25.4 billion.

Last month, the Government extended its current trading plan to sell off some of its stake by two years.

It was the second extension the plan, which was originally set up in 2021 as a one-year programme to reduce its stake by around 15%.

NatWest Group chief executive officer Alison Rose said: “This transaction reduces Government ownership below 40% and demonstrates positive progress on the bank’s strategic priorities and the path to privatisation.

“NatWest Group’s robust balance sheet and capital generation allow us to continue lending responsibly and supporting the customers and communities we serve whilst delivering sustainable returns to our shareholders, including the Government.”

In March last year, NatWest confirmed it was majority-owned by private investors for the first time since the bailout, in a milestone for the recovery of the business.

Earlier this year, the firm’s chief executive an annual bonus for the first time since the financial crisis.

Andrew Griffith, economic secretary to the Treasury, said: “Today’s sale is another major milestone in returning NatWest to full private ownership as promised.

“The Government has now sold well over half of its shareholding.”