NatWest chief executive Paul Thwaite has spent most of his career at the bank. It is one of the few things he has in common with his predecessor, Dame Alison Rose, who resigned last year amid a political scandal sparked by the ““de-banking” of Nigel Farage.
Thwaite is no rookie, having joined the bank in 1997, and has promised to continue Rose’s strategy. His priorities – simplifying the bank and adapting it to the digital age – are in line with previous goals.
But people who know him say the 52-year-old Liverpool native is trying to differentiate himself from his former boss as he looks to make his mark at the lender.
“When Paul took over, he immediately said, ‘Let’s get back to basics,’” said one person close to the bank. “It represented a view that was very much in the bank, where NatWest seemed to have taken a backseat to this ‘purpose’ approach.”
Thwaite is at the helm of one of the UK’s largest banks at a key time for the lender, with the government cease to be a controlling shareholder Nearly 16 years after the Royal Bank of Scotland was rescued by a taxpayer bailout, the bank now known as NatWest is trying to put its future behind it. The Farage dispute with not only a new CEO but also a new president, Rick Haythornthwaite.
Critics say Thwaite’s appointment was rushed because the previous Conservative government needed stability at the top so it could sell part of its stake to the public. The plan, which cost the bank £24m, It ended up being archived After the Conservative government lost the general election in July, the new Labour chancellor, Rachel Reeves, called the sale a “misuse of taxpayers’ money”.
Thwaite was promoted to the top job on an interim basis last July following Rose’s resignation at the height of the debanking scandal, beating out candidates including David Lindberg, who now runs NatWest’s retail bank. Thwaite’s appointment became permanent in February following a six-week process led by Haythornthwaite, the former Mastercard boss who took over the NatWest presidency from the City veteran Sir Howard Davies in January.
The bank needed stability. It had been locked in a dispute with Farage, the politician who claimed that Coutts, NatWest’s private lender, had “de-banked” him. By obtaining a 40-page banking file, Farage showed that NatWest had at least considered his political views in making the decision.
Senior bankers describe Thwaite, who has a degree in management and chemistry, as “cautious” and “candid.” Supporters welcome his more bank-focused approach, which they say contrasts with Rose’s more public style.
“She was taking on a broader role in British society, which if you’re running one of the biggest banks is not a small thing,” said Edward Firth, an analyst at Keefe, Bruyette & Woods. “My sense at the moment is that Paul’s focus is very NatWest-centric and that will probably be welcomed from a shareholder perspective.”
Rose, who will be made a Dame in 2023 for her services to financial services and her actions on gender inclusion and climate change, resigned after admitting that she had misinformed a BBC journalist about the Reform UK leader’s case.
Her focus on the bank’s “purpose” and diversity and inclusion was a big part of the “Alison brand,” people familiar with the matter said.
“[Thwaite and Rose] “They are very different people,” said one industry source. “He is a cautious guy, he is a conservative guy, he is a mathematician by training. [ . . . ] Alison is more intuitive, less cautious, perhaps even more ambitious.”
However, Thwaite is also not averse to dabbling in political circles and is an adviser to the new Labour government’s wealth fund, designed to support infrastructure projects across the UK.
One of Thwaite’s first moves was to cut the bank’s executive committee by a third in May to “remove complexity” at the top. NatWest now has an executive team of 10, compared with 14 at rival Lloyds Banking Group and 15 at Barclays.
“He knew where the bodies were buried, what the issues were and he’s trying to address a couple of them quite clearly,” said a senior banking executive who has worked closely with Thwaite, adding that the move would encourage greater “accountability.”
Rose’s former inner circle has also shrunk. Rob Whittick, her chief of staff, has been sacked. Mohammad Syed, another close Rose ally, also resigned last month after losing the top job at Coutts to an outsider, Emma Crystal. Whittick and Syed declined to comment.
Meanwhile, strengthening the group’s board is seen as a priority for new chairman Haythornthwaite. The lender said in July that Mark Seligman would not seek re-election to the board and that Ian Cormack would step down. Haythornthwaite would renew the board organically as more people reached the end of their recommended nine-year term, said a person familiar with his strategy.
Thwaite’s challenge will be to grow the bank he inherited, which is nearing full recovery since it was rescued in a £46bn bailout at the height of the financial crisis. The exit from government is likely to be a key theme of his tenure. The state has already reduced its stake from 38 per cent in December to less than 20 per cent and analysts expect it to return to full private hands in the first half of next year.
“Will they continue to return that capital to shareholders or is there opportunity to invest further in growing the business and the balance sheet?” asked Gary Greenwood, an analyst at Shore Capital.
Under Thwaite’s leadership, the bank, with 19 million existing customers, has purchased Most of Sainsbury’s bankwhich could add up to £1bn, which should help NatWest grow its unsecured lending, where it lacks scale compared to peers. It also bought around £2.5bn of prime residential mortgages from Metro Bank.
Thwaite had already identified the trading and wealth management businesses as key growth areas. Ben Pollard, chief executive of Cushon, a pensions fintech company owned by NatWest, said the unit would look at mergers and acquisitions to meet its growth targets. “Whether it’s in smaller or larger schemes, if we see the right opportunity then we will look to act.”
But the bank remains plagued by the same long-term problems affecting other banks’ share prices. It faces increasing competition from more agile competitors, including financial technology startups, as well as big tech companies looking to take market share from banks in retail payments.
Despite having risen 56% on the stock market this year, NatWest still trades at around 70% of its book value. Like its peers, it faces onerous regulation, including the Financial Conduct Authority’s “consumer duty” rule, which means the bank has to collect data and report on the fair value it offers to customers.
Like other banks, NatWest has benefited from rising interest rates, which have helped it to post record profits last year. In the latest quarter, it posted pre-tax operating profits of £1.7bn, above analysts’ expectations of £1.3bn. It has also raised its forecast for return on tangible equity, a key measure of bank profitability, to more than 14% this year.
Other lenders saw a similar rise, with the FTSE 350 Banks Index up 16.7 per cent since January.
Firth said Thwaite’s timing was “extraordinarily fortunate”: he took over just as investors were renewing their interest in banks. Lenders had survived higher rates without a credit cycle, and improved margins were driving better returns.
“Her timing was exemplary, but if Alison were still here today, would the share price be at the same level? I suppose so.”
Additional information from Anjli Raval