It will take big discounts to entice Sid into buying Natwest shares, says MAGGIE PAGANO

Jeremy Hunt will not be a happy bunny after several top City financiers said NatWest shares will have to be sold at a deep discount if it is to get the next tranche off the Government’s books.

The Chancellor is expected to announce the sale of a large chunk of her 33 per cent stake in NatWest in next Wednesday’s Budget, as part of plans to raise as much revenue as possible.

However big the plans are, the shares will not be an easy sell: they have been hovering around the 230p level for the past five years, valuing the bank at around £20bn.

In fact, they have barely moved since the Government bailed out the bank (formerly Royal Bank of Scotland) in 2008. In March 2007, the shares were trading at more than £6.

It is not known how much the Government will try to sell.

But some analysts estimate it could offload around 20 per cent in the summer, leaving NatWest to buy back 5 per cent a year over the next three years.

Hunt and his Goldman Sachs advisers must know that they will have to offer the biggest carrots if they are to attract private investors to a fancy ‘Tell Sid’-style marketing campaign.

Some say the carrot will have to be at least 10 percent off the market price.

Tim Jacobs, head of primary markets at Hargreaves Lansdown, points out that the public can now buy NatWest on the secondary market.

Along with AJ Bell, Hargreaves is likely to be appointed to handle the retail offering, so he obviously wants to get everything he can out of it.

If the sale is to be a hit with retail investors, then it has to be cheap.

As Shore Capital banking analyst Gary Greenwood says, this is as much a political sale as a value one, and will come down to price alone. And so it is.

But what price should that be to make it worth it for private investors?

With so many risks, such as the legal threat from Nigel Farage and the news that he has been involved in closing other trading accounts for political reasons, still looming over the bank, why would anyone want to invest?

On top of these unquantifiable risks, NatWest has hardly proven to be the most dynamic business.

Like most High Street clearing banks, it closed branches, reduced its balance sheet and turned its services into a faceless entity without any of the human touches we expect from what is essentially customer service.

What’s worse, small business owners are suffering the most at a time when growth is so important.

Profit margins are likely to fall again as interest rates begin to fall, so the near-term earnings outlook is not bright.

However, there is an alternative view: banks’ valuations are low and they sell at low multiples of five times earnings compared to ten times a decade ago.

It may be that once the Government’s dead hand has been removed, NatWest can go back to being a boring bank like it was in the pre-Fred Goodwin era, improve services, pay more dividends and stop playing politics.

On the whole, that seems unlikely. One for the brave.

Santiago’s dive

How ironic that a wealth expert like St James’s Place is so poor at managing other people’s wealth.

And it turns out it’s pretty bad at managing its own: shares plummeted by a third at one point yesterday after it revealed it had set aside £426m to compensate clients who overpaid for advice and fees .

This follows a major overhaul of its fee structure last year after the financial watchdog introduced rules, as well as a newspaper investigation which showed it was overcharging clients thousands more than rivals for pension advice. .

It has since removed its controversial “exit fees” and capped advisory and funding charges. Hopefully, she has learned the hard way that it really isn’t worth overcharging or cheating her clients in the long run.

Petrolheads

Aston Martin is delaying the launch of its first electric car because drivers still want the smell of gasoline and the roar of the engine. Listen Listen!

Instead, the luxury automaker is going hybrid and recently launched its first plug-in hybrid supercar, the Valhalla. Let’s hope their drivers don’t drive so fast that they end up in Odin’s hall looking for slain warriors.