Natwest open to acquisitions, predicts banking consolidation


Speaking at the Goldman Sachs European Financials Conference in Madrid, Paul Thwaite said Natwest would “review opportunities” to grow through acquisitions

The chief executive of Natwest has said the lender is open to acquisitions and predicted more consolidation in the UK banking market over the coming years.

Speaking at the Goldman Sachs European Financials Conference in Madrid, Paul Thwaite said Natwest would “review opportunities” to grow through acquisitions.

It has been interesting, but not a surprise, to me to see some of the activity in the UK market, he said.

I personally thought there was a degree of inevitability about it given some of the structural profitability challenges in parts of the UK market, as well as some of the ownership structures that exist in some of the banks and potentially people looking for exits, he added.

His comments follow a string of mid-sized banking sector tie-ups as high street challengers have acquired smaller rivals struggling with cost pressures.

This year alone, Barclays has bought most of Tesco Bank, and Coventry Building Society agreed to a £780 million takeover of The Co-operative Bank. The biggest deal by far has been Nationwide’s £2.9 billion agreement to acquire Virgin Money, which shocked the City when it was first announced in March.

It has not surprised me at all, and I think there will be more consolidation as we go through, Thwaite added. Assuming the macro does not change, I think we will see more consolidation over the course of the next couple of years.

Natwest has been put forward as a potential acquirer in the mid-sized banking space, most recently for TSB Bank in the scenario that it goes up for sale under a new parent company.

Thwaite said that while acquisitions were “not off the table” for Natwest, the bank would approach opportunities through “a very clear lense”.

It needs to offer compelling shareholder value and compelling strategic rationale, so strategic congruence. So they are the two lenses that I look through with the team, Thwaite said.

He noted some of Natwest’s recent “tactical M&A”, including inking a deal to acquire a £3 billion mortgage portfolio from Metro Bank in 2020 “that added scale to our mortgage business and healthy returns”.

The bank was reportedly an interested party for a further £3 billion of Metro Bank’s mortgage book when it considered selling it last year.

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