Plans for a multibillion pound mass market sale of the government’s stake in NatWest Group have been derailed by Rishi Sunak’s decision to call a summer general election.

Sky News can reveal that a proposed retail offer of shares in the taxpayer-backed bank will be scuppered by the timing of the poll.

The Treasury has been preparing for months for a retail offering, with several billion pounds-worth of NatWest shares to be offloaded at a discount to the prevailing market price.

Under the government’s plans, it would have taken place alongside an institutional placing of shares, with taxpayers’ stake to be reduced to as little as 10% after the combined sale.

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Several sources confirmed while the prime minister addressed the country from Downing Street that the NatWest retail offer was “now in the deep freeze”.

Jeremy Hunt, the chancellor, announced in last year’s autumn statement that he would explore a mass-market share sale “to create a new generation of retail investors”.

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Since that point, further buybacks by the bank and stock sales by the government have reduced the taxpayer’s stake to around 28% – worth about £7bn at NatWest’s current valuation.

A retail offer could yet be revived after the general election, with Labour not ruling out support for the idea in recent months.

However, the delay induced by the general election is likely to postpone the timing of the government’s full privatisation of NatWest, 16 years after it was rescued from the brink of collapse with £45.5bn of public money.

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Shares in NatWest have risen by more than 20% over the last year despite the turbulence surrounding the debanking row involving Nigel Farage, the former UKIP leader.

Mr Farage, who has threatened to launch legal action against the bank, recently declared his fight with the lender “far from over”.

The government’s stake in NatWest has been steadily reduced during the last eight years from almost 85%.

NatWest, which changed its name from Royal Bank of Scotland Group in an attempt to distance itself from its hubristic overexpansion, was rescued from outright collapse by an emergency bailout that Fred Goodwin, its then boss, likened to “a drive-by shooting”.

NatWest declined to comment.

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