Could Natwest be gearing up for a series of acquisitions post-privatization?
NatWest, after breaking free from government ownership, now positions itself for potential acquisitions, signalling a shift towards growth and expansion. The FTSE 100 titan is expected to exit privatisation in the coming days, accelerated by the government's sales push over the past year.
The banking behemoth has acquired £5bn worth of shares from the government as part of its share buyback program over the last four years. With the bank's return to private ownership, these freed funds might fuel an acquisition spree.
An £11bn bid for Santander UK's retail arm was submitted by NatWest earlier this year, according to Financial Times reports. Although negotiations between the two lenders have since stalled, this offer could offer an insight into NatWest's future post-privatisation plans.
The bank embarked on its acquisitive path last year, purchasing Sainsbury's banking assets. In the same vein, a £2.5bn residential mortgages portfolio from Metro Bank was acquired in July 2024.
The deal with Metro Bank was described by Chief Executive Paul Thwaite as a "further opportunity to accelerate the growth of our retail mortgage book within our existing risk appetite". He expects the transaction to deliver "attractive returns".
This stance marks a departure from NatWest's past, where the firm offloaded Worldpay, a payment tech company, in 2010 and 2013.
During its struggling years following the 2008 financial crisis, the Treasury had maintained a stake in the lender (then RBS). It wasn't until the bank's bumper first quarter of 2025, where a rush to beat the stamp duty deadline led to a £3.4bn increase in net loans, that the bank powered back with strength.
The bank's net interest margin, a key indicator of its profitability from lending, expanded eight basis points during this period. NatWest pocketed £1.8bn in pre-tax profit, surpassing analysts' expectations.
A robust capital position, solid performance, and rising share price present a strong foundation for NatWest's potential acquisition efforts. It remains to be seen, however, how the bank navigates regulatory scrutiny and the process of integrating acquired businesses.
- NatWest's financial resources, freed by its exit from government ownership, could potentially be used to further its acquisition spree in various markets, such as the retail arm of Santander UK and a large residential mortgages portfolio from Metro Bank.
- With its return to private ownership and robust financial standing, NatWest could potentially engage in significant investing activities, including buying stakes in other businesses or industries, which could impact the wider economy.
- The bank's CEO, Paul Thwaite, anticipates that the acquisitions, like the one from Metro Bank, will not only help grow NatWest's retail mortgage book but also deliver attractive returns on finance, thus strengthening the bank's overall business strategy.
