NatWest Group plc is a British banking and insurance holding company, based in Edinburgh, Scotland. It operates a variety of banking brands offering personal and business banking, private banking, investment banking, insurance and corporate finance. In the UK, its main subsidiary companies are National Westminster Bank, Royal Bank of Scotland,The Scottish Gaelic name () is used by its retail banking branches in parts of Scotland, especially in signage and customer stationery. NatWest Markets, Coutts and Evelyn Partners. NatWest Group issues banknotes in Scotland and Northern Ireland.
Before the 2008 financial crisis, NatWest Group was briefly the largest bank in the world, and for a period was the second-largest bank in the UK and Europe and the fifth-largest in the world by market capitalisation. With a slumping share price and major loss of confidence, it fell sharply in the rankings, although in 2009 it was briefly the world's largest company by both assets (£1.9 trillion) and liabilities (£1.8 trillion).
NatWest Group was bailed out by the UK government via the 2008 United Kingdom bank rescue package. The government retained a majority share until 28 March 2022, held and managed through UK Government Investments. It reduced its shareholding in a series of transactions, selling off its final shares on 30 May 2025, at a total loss of £10bn to the taxpayer. In addition to its primary share listing on the London Stock Exchange, NatWest Group is listed on the New York Stock Exchange.
History
The Royal Bank of Scotland Group By the late 1960s, economic conditions were becoming more difficult for the banking sector. In response, the National Commercial Bank of Scotland merged with the Royal Bank of Scotland. The merger resulted in a new holding company, the National and Commercial Banking Group being founded in 1968, with the merger formalised in 1969.Memorandum and Articles of Association, dated 18 March 1968; Certificate of Incorporation under the Companies Act 1948, dated 25 March 1968 The holding company was renamed The Royal Bank of Scotland Group in 1979Special Resolution, dated 4 July 1979; Certificate of Incorporation on Change of Name with the approval of the Department of Trade, dated 3 September 1979 and became a public company in 1982.Certificate of Incorporation on Re-registration as a Public Company under the Companies Acts 1948 to 1980, dated 10 March 1982
The late 1990s saw a new wave of consolidation in the financial services sector. In 1999, the Bank of Scotland launched a hostile takeover bid for English rival National Westminster Bank. The Bank of Scotland intended to fund the deal by selling off many of NatWest's subsidiary companies, including Ulster Bank and Coutts. However, the Royal Bank of Scotland subsequently tabled a counter-offer, sparking off the largest hostile takeover battle in UK corporate history. A key differentiation from the Bank of Scotland's bid was the Royal Bank of Scotland's plan to retain all of NatWest's subsidiaries. Although NatWest, one of the "Big Four" English clearing banks, was significantly larger than either Scottish bank, it had a recent history of poor financial performance and plans to merge with insurance company Legal & General were not well received, prompting a 26% fall in share price.
On 11 February 2000, The Royal Bank of Scotland was declared the winner in the takeover battle, becoming the second largest banking group in the UK after HSBC Holdings. NatWest as a distinct banking brand was retained, although many back-office functions of the bank were merged with the Royal Bank's, leading to over 18,000 job losses throughout the UK.NatWest merger's mixed fortunes BBC News, 2000
Integration of NatWest with Royal Bank of Scotland The IT integration project was costed at £1.5 billion per year for a project of 3 years duration with an expected return on investment of 1.5 billion per year at conclusion. By completion the project employed up to 10,000 contract staff in addition to internal resources. A significant difference between this and other traditional IT integration projects was the choice to use what was described as 'the Wachovia Strategy', whereby the assets of the acquired bank were not to be integrated with the acquiring bank, but rather the data representing the IT assets was to be extracted, transformed and loaded (ETL) into the RBS IT systems.
Further expansion
In August 2005, the bank expanded into China, acquiring a 10% stake in the Bank of China for £1.7 billion, which it had sold by 2009.
In 2005, the bank built a new international headquarters at Gogarburn on the outskirts of Edinburgh, and was opened by Queen Elizabeth II and Prince Philip, Duke of Edinburgh.
The group was part of a consortium with Belgian bank Fortis and Spanish bank Banco Santander that acquired Dutch bank ABN AMRO in October 2007. Rivals speculated that RBS had overpaid for the Dutch bank although the bank pointed out that of the £49bn paid for ABN AMRO, RBS's share was only £10bn (equivalent to £167 per citizen of the UK).
Much later, the bank announced it was to scale back its international presence. "Let me spell it out very clearly: the days when RBS sought to be the biggest bank in the world, those days are well and truly over", Chief Executive Ross McEwan, who had been in charge of the bank for four months, said in unveiling plans to reduce costs by £5bn over four years. "Our ambition is to be a bank for UK customers", he added.
2007–2008 financial crisis
On 22 April 2008, RBS announced a rights issue which aimed to raise £12 billion in new capital to offset a writedown of £5.9 billion resulting from credit market positions and to shore up its reserves following the purchase of ABN AMRO. This was, at the time, the largest rights issue in British corporate history.
The bank also announced that it would review the possibility of divesting some of its subsidiaries to raise further funds, notably its insurance divisions Direct Line and Churchill. Additionally, the bank's stake in Tesco Bank was bought by Tesco for £950 million in 2008.
On 13 October 2008, in a move aimed at recapitalising the bank, it was announced that the British Government would take a stake of up to 58% in the Group. The aim was to "make available new tier 1 capital to UK banks and building societies to strengthen their resources permitting them to restructure their finances, while maintaining their support for the real economy, through the recapitalisation scheme which has been made available to eligible institutions".
HM Treasury injected £37 billion ($64 billion, €47 billion, equivalent to £617 per citizen of the UK) of new capital into Royal Bank of Scotland Group, Lloyds TSB and HBOS, to avert financial sector collapse. The government stressed, however, that it was not "standard public ownership" and that the banks would return to private investors "at the right time".
Alistair Darling, the Chancellor of the Exchequer, stated that the UK government would benefit from its rescue plan, for it would have some control over RBS in exchange for £5 billion in preference shares and underwriting the issuance of a further £15 billion in ordinary shares. If shareholder take-up of the share issue was 0%, then total government ownership in RBS would be 58%; and, if shareholder take-up was 100%, then total government ownership in RBS would be 0%. Less than 56 million new shares were taken up by investors, or 0.24pc of the total offered by RBS in October 2008.RBS now 58% owned by UK Government Telegraph, 28 November 2008
As a consequence of this rescue, the chief executive of the group, Fred Goodwin, offered his resignation and it was duly accepted. Sir Tom McKillop confirmed that he would stand down from his role as chairman when his contract expired in March 2009. Goodwin was replaced by Stephen Hester, previously the chief executive of British Land, who commenced work at the Royal Bank of Scotland in November 2008.
On 19 January 2009, the British Government announced a further injection of funds into the UK banking system in an attempt to restart personal and business lending. This would involve the creation of a state-backed insurance scheme which would allow banks to insure against existing loans going into default, in an attempt to restore the banks' confidence.UK banking plan faces criticism BBC News, 19 January 2009
At the same time the government announced its intention to convert the preference shares in RBS that it had acquired in October 2008 to ordinary shares. This would remove the 12% coupon payment (£600m p.a.) on the shares but would increase the state's holding in the bank from 58% to 70%.RBS shares plunge on loss BBC News, 19 January 2009
On the same day RBS released a trading statement in which it expected to post full-year trading losses (before writedowns) of between £7bn and £8bn. The group also announced writedowns on goodwills (primarily related to the takeover of Dutch bank ABN-AMRO) of around £20bn. The combined total of £28bn would be the biggest ever annual loss in UK corporate history (the actual figure was £24.1bn). As a result, during the Blue Monday Crash, the group's share price fell over 66% in one day to 10.9p per share, from a 52-week high of 354p per share, itself a drop of 97%.
Mid-2008 onwards RBS' contractual commitment to retain the 4.26% Bank of China (BoC) stake ended on 31 December 2008, and the shares were sold on 14 January 2009. Exchange rate fluctuations meant that RBS made no profit on the deal. The Scottish press suggested two reasons for the move: the need for a bank mainly owned by HM Treasury to focus scarce capital on British markets, and the growth possibility of RBS's own China operations.
Also in March 2009, RBS revealed that its traders had been involved in the purchase and sale of sub-prime securities under the supervision of Fred Goodwin.
In September 2009, RBS and NatWest announced dramatic cuts in their overdraft fees including the unpaid item fee (from £38 to £5), the card misuse fee (from £35 to £15) and the monthly maintenance charge for going overdrawn without consent (from £28 to £20).Jones, Rupert. "Royal Bank of Scotland and NatWest cut overdraft charges". The Guardian. 7 September 2009 The cuts came at a time when the row over the legality of unauthorised borrowing reached the House of Lords. The fees were estimated to earn current account providers about £2.6bn a year.Osborne, Hilary. "Bank charges appeal reaches House of Lords". The Guardian 23 June 2009 The Consumers' Association chief executive, Peter Vicary-Smith, said: "This is a step in the right direction and a victory for consumer pressure."
In November 2009, RBS announced plans to cut 3,700 jobs in addition to 16,000 already planned, while the government increased its stake in the company from 70% to 84%.
In December 2009, the RBS board revolted against the main shareholder, the British government. They threatened to resign unless they were permitted to pay bonuses of £1.5bn to staff in its investment arm.
More than 100 senior bank executives at the Royal Bank of Scotland were paid more than £1 million in late 2010 and total bonus payouts reached nearly £1 billion – even though the bailed-out bank reported losses of £1.1 billion for 2010. The 2010 figure was an improvement on the loss of £3.6 billion in 2009 and the record-breaking £24bn loss in 2008. The bonuses for staff in 2010 topped £950 million. The CEO Stephen Hester got £8 million in payments for the year. Len McCluskey, the general secretary of Unite the Union, said: "Taxpayers will be baffled as to how it is possible that while we own 84% of this bank it continues to so handsomely reward its investment bankers."
In October 2011, Moody's downgraded the credit rating of 12 UK financial firms, including RBS, blaming financial weakness.UK financial firms downgraded by Moody's rating agency, BBC News (7 October 2011)