NatWest chief executive Paul Thwaite has spent most of his career at the high street bank. It is one of the few things he has in common with his predecessor, Dame Alison Rose, who stepped down last year in the midst of a political scandal prompted by the “debanking” of Nigel Farage.
Thwaite is hardly a new broom: he joined the lender in 1997 and has pledged continuity with Rose’s strategy. His priorities — simplifying the bank and making it fit for the digital age — are in line with previous goals.
But people who know him say the 52-year-old Liverpudlian is seeking to differentiate himself from his old boss as he seeks to make his mark on the lender.
“When Paul took over, he immediately said: ‘Let’s just get back to basics,’” said a person close to the bank. “He represented a view that was quite present within the bank that said NatWest seems to have become quite sidelined in this focus on ‘purpose’.”
Thwaite is at the helm of one of the UK’s biggest banks at a key time for the lender, with the government ceasing 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 move on from the Farage dispute with not just a new CEO but also a new chair, Rick Haythornthwaite.
Critics say Thwaite’s appointment was rushed because the previous Conservative government needed stability at the top in order to sell part of its stake to the public. The plan — which cost the bank £24mn — ended up being shelved after the Tory government lost a general election in July. The new Labour chancellor, Rachel Reeves, dubbed the sale a “bad use of taxpayers’ money”.
Thwaite was first propelled to the top job on an interim basis last July after Rose’s resignation at the height of the debanking scandal, beating candidates including David Lindberg, who now heads NatWest’s retail bank. Thwaite’s appointment became permanent in February after a six-week process led by Haythornthwaite, the former Mastercard boss who took over as NatWest chair from City veteran Sir Howard Davies in January.
The bank needed stability. It had been locked in a row with Farage, the politician who claimed he had been “debanked” by NatWest’s private lender Coutts. Obtaining a 40-page bank dossier, Farage proved that NatWest had at least considered his political views when making the decision.
Senior bankers describe Thwaite, who has a degree in management and chemistry, as “cautious” and “straight-talking”. His proponents welcome his narrower focus on the bank, which they say contrasts with Rose’s more public-facing style.
“She was taking a broader role in UK society, which if you run one of the biggest banks, is not a stupid thing to be doing,” said Edward Firth, an analyst at Keefe, Bruyette & Woods. “My sense at the moment is that Paul’s focus is very much on NatWest and that is probably to be welcomed from a shareholder perspective.”
Rose — who in 2023 received a Damehood for her services to financial services and her actions on gender inclusivity and climate change — resigned following her admission that she had inaccurately briefed a BBC journalist on the Reform UK party leader’s case.
Her focus on the bank’s “purpose” and diversity and inclusion was a big part of “brand Alison”, said people familiar with the matter.
“[Thwaite and Rose] are very different people,” said an industry source. “He is a cautious guy, he’s a conservative guy, he’s a mathematician by training [ . . . ] Alison is more intuitive, less cautious, perhaps even more ambitious.”
Yet Thwaite is not averse to dabbling in political circles, either, and is an adviser to the new Labour government’s wealth fund which is designed to support infrastructure projects across the UK.
One of Thwaite’s first moves was slashing 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 rivals Lloyds Banking Group and 15 at Barclays.
“He knew where the bodies were buried, what the issues were, and he’s trying to grip a couple of them quite clearly,” said a senior banking executive who has worked closely with Thwaite, adding that the move would drive greater “accountability”.
Rose’s former inner circle is also now depleted. Rob Whittick, her chief of staff was let go. Mohammad Syed, another close ally of Rose, also resigned last month after he lost out on the top Coutts job to outsider Emma Crystal. Whittick and Syed declined to comment.
Meanwhile, strengthening the group’s board is seen as a priority for the new chair, Haythornthwaite. The lender said in July that Mark Seligman would not seek re-election as a board member and that Ian Cormack would step down. Haythornthwaite would refresh the board organically as more people came to the end of their recommended nine-year tenure, said a person familiar with his strategy.
Thwaite’s challenge will be growing the bank he inherited as it nears full recovery since it was rescued in a £46bn bailout at the height of the financial crisis. The government’s exit is likely to be a key theme of his term. The state has already cut its stake from 38 per cent in December to below 20 and analysts expect a full return to private hands in the first half of next year.
“Do you continue to return that capital to shareholders or are there opportunities to invest more in growing the business and balance sheet?” said Gary Greenwood, an analyst at Shore Capital.
Under Thwaite’s leadership, the high street bank, with an existing 19mn customers, has purchased the bulk of Sainsbury’s bank, which could add a planned 1mn. This should help NatWest grow its unsecured lending, where it lacks scale compared to peers. It also bought about £2.5bn of prime residential mortgages from Metro Bank.
Thwaite has previously identified the commercial and wealth management businesses as key growth areas. Ben Pollard, chief executive of NatWest-owned pension fintech Cushon, said the unit would look to M&A to meet its growth targets. “Whether that’s from smaller or larger schemes, if we see the right opportunity then we’ll look to act.”
But the bank remains plagued by the same long-term issues that are weighing on the share prices of other banks. It faces growing competition from more nimble challengers, including fintech upstarts as well as Big Tech companies looking to take market share from the banks in retail payments.
Despite soaring 56 per cent on the stock market this year, NatWest is still trading at about 70 per cent of its book value. Like its peers, it is facing burdensome regulation including the Financial Conduct Authority’s “consumer duty” rule, which means the bank has to gather data and report on the fair value it is offering customers.
Like other banks, NatWest has benefited from rising interest rates that boosted it to record profits last year. In the last quarter, it posted operating profits before tax of £1.7bn, above analysts’ expectations of £1.3bn. It also upgraded its return on tangible equity forecast, a key measure of bank profitability, to surpass 14 per cent this year.
Other lenders had a similar uplift: the FTSE 350 Banks index is up 16.7 per cent since January.
Thwaite’s timing had been “extraordinarily lucky”, said Firth: he took the top job just as investors were renewing their interest in banks. Lenders had survived higher rates without a credit cycle, and better margins were driving improved returns.
“His timing was exemplary, but if Alison was still here today, would the share price be at the same level? My guess is, yes.”
Additional reporting by Anjli Raval
