NatWest’s swoop on Sainsbury’s banking assets comes with some regret north of the border, writes TERRY MURDEN
NatWest’s acquisition of banking assets from Sainsbury’s marks a significant move by new CEO Paul Thwaite and another milestone in the rehabilitation of what was Royal Bank of Scotland from the dark days of the 2008-09 financial crash. It also has echoes of Fred Goodwin’s talk of “mercy killings” when, in his pomp, he surveyed the banking sector from the top of the hill and was able to take out struggling rivals.
We don’t need reminding of what happened to Goodwin and RBS, but we should note that the big banks recovered sufficiently to see off the competition from the supermarket groups which thought they could join the “challenger” revolution. Sainsbury’s is paying NatWest to take the assets off its hands in a deal that follows the sale of Tesco Bank’s banking activities to Barclays.
For NatWest the deal will confirm its position in a key sector of the market by bringing in some higher yielding consumer loan products. As Shore Capital analyst Gary Greenwood noted it is underweight in unsecured personal lending and credit cards, with this having been identified by management as an area for growth.
From a broader perspective, it comes ahead of a likely sale of the Government’s remaining stake in a retail share offer that Labour is expected to pick up from the Tories, given that it will bring in at least £5 billion. For the Chancellor-in-waiting Rachel Reeves to complete that process would neatly bring a close to the rescue deal put together by Alistair Darling during his spell at the Treasury.
Sadly for Scotland, the current growth plan is now taking place in London rather than in Edinburgh. Despite the board’s insistence that it is headquartered north of the border, everybody else knows where the decisions are being made. The Scottish lawyers and other professionals who have seen business head south. RBS customers who have wrongly received NatWest documentation. Corporate events in Scotland that are not attended by the bank’s CEO or chairman as happened in days past.
The London takeover of RBS has even seen the corporate identity switch from royal blue to NatWest’s purple. When Ms Reeves turned up at Gogarburn recently to deliver a Q&A to staff there were no senior members of the board in the offices to greet her. Would that have happened in the days of George Mathewson or under the vilified Fred Goodwin?
While the bank recovers and grows, its Scottish identity is clearly in jeopardy. Even the Sainsbury’s deal, which involved another “Scottish headquartered” bank, was not deemed worthy of a mention on the BBC’s Good Morning Scotland.
NatWest is making strides to maintain its place among banking’s big four, but it must be the only member of the FTSE 100 that has the name of a subsidiary emblazoned on its HQ. Maybe the political ramifications of replacing it is just one step too far.
These things matter as banking has been a mainstay of the Scottish economy and any further erosion of its place in Scotland will undermine attempts at growth.
Terry Murden was Scotland editor and Business Editor at The Sunday Times, Business Editor at The Scotsman, and Business and City Editor at Scotland on Sunday. He is now Editor of Daily Business
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