NatWest Group PLC (LSE:NWG) shares fell after Jeremy Hunt said the government would look to sell off shares in the lender still owned by the state by 2026.
In his autumn statement, the Chancellor said he would look at a retail offer for the shares as an option "in the next 12 months, subject to supportive market conditions and achieving value for money".
After a series of share sales in recent years, including two in February and another in March this year, reducing the stake held by The Commissioners of His Majesty's Treasury to below 42%, a buyback by NatWest in May further trimmed the taxpayer's shareholding to its current 38.69%.
The stake originates from the government bail-out of what was previously known as The Royal Bank of Scotland Group in the 2007-08 financial crisis.
In his statement today, Hunt said: "The government is committed to exiting its shareholding in NatWest, subject to market conditions and sales representing value for money."
He said the government intends to fully exit by 2025-26 using a range of methods, including accelerated bookbuilds and directed buybacks.
A retail offer would be one of a number of options to be explored, he added.
Shares in NatWest were down 1.2% to 204.6p after the statement.
Asked about the possibility of a retail share offer, Anand Sambasivan, chief executive of PrimaryBid, said: "At this critical moment for the UK’s capital markets, involving the British public in Natwest’s privatisation makes complete sense. It’s an opportunity to rebuild engagement and ownership in our public markets."
"It’ll be tweet Sid this time," he added, referring to the iconic campaign for the British Gas share sale in 1980s.
Alasdair Haynes, chief executive of Aquis Exchange, said the NatWest retail share offer "reflects a crucial shift towards rebuilding an equity culture following a decade of de-equitisation".
While marking a positive step to attract new retail investors to the UK markets, he also called for a "wider cultural change" alongside regulatory reforms, saying: "we strongly urge the government to accompany this initiative with education for individual investors around the fundamentals of long-term investment, risk/reward considerations, and balancing a portfolio".