Latest news with #RickHaythornthwaite
Daily Mail
5 days ago
- Business
- Daily Mail
NatWest is grateful to taxpayers and it's ready to get the UK growing, says chairman Rick Haythornthwaite
Sir Rick Haythornthwaite is the chair of NatWest. As NatWest, the bank I chair - or RBS as it was then - returns to full private ownership for the first time since the global financial crisis, I can still vividly recall the fear that gripped markets and the country in those fraught weeks of October 2008. At that time, I was Chair of Mastercard in the United States. And although we were not at the epicentre of the storm, our customers and colleagues certainly were. These events took place nearly two decades ago, but remain fresh in my mind. Fear that the ATMs would stop working. That the whole financial system – savings, mortgages, cash - would grind to a halt, with results that could barely be contemplated. It was a time of extraordinary uncertainty that required extraordinary action. The Prime Minister, Gordon Brown, and the Treasury team, led by the then Chancellor Alistair Darling, were under enormous pressure. They took a bold decision to step in and rescue our banking system and, by extension, our economy. While the passage of time makes it easy to underplay this moment of reckoning, we at NatWest remain incredibly grateful to the government, and to UK taxpayers, for their intervention. It stabilised the UK financial system at a time of global crisis. It saved the country's banks and, in turn, protected millions of borrowers, homeowners, savers and businesses. And it provided the capital for UK banks first to survive and later to undertake the fundamental change that was required. In 2008, RBS Group was fleetingly the biggest bank in the world, with £2.2 trillion of assets, larger than the entire GDP of the UK. For over a decade, the bank was in recovery mode. Initially this was 'life support' but, as the bank was stabilised, there was the opportunity to refocus. Today, having rebranded to NatWest Group, we are simpler, safer and focused on our customers. We are consistently profitable, with around 95 per cent of our revenues coming from the UK. And finally - after 17 years - it was yesterday announced that the government is no longer a shareholder in our bank. Although this has no strategic or operational impact, it is a significant symbolic moment, marking a new, forward-looking chapter in our story. Of course, it is not just NatWest Group that has changed since 2008. The balance sheets of banks across the UK have fundamentally transformed, allowing us to continue lending and supporting our customers through a number of real-life stress-tests – from the Covid pandemic, to energy price shocks through to costing of living challenges. These events have shown that our banking system is strong and resilient to the biggest pressures. In part, this is because of the sweeping regulatory changes put in place after the financial crisis. This high-quality regulation is a competitive advantage - valued by global investors - and is something we should protect, even though there are clear opportunities to reduce duplication and complexity. Perhaps the biggest transformation has been in the City's culture. Those in power are rightly held to high standards. And industry leaders, Boards and regulators have focused on embedding values that encourage employees to act in the best interests of both the consumer and wider society. The financial crisis showed us the consequences of when ambition comes before customers. Today NatWest Group is about winning with our customers, rather than winning at all costs. Of course, customers themselves have higher expectations too. The continued pace of technological change, along with increases in competition, have shifted the balance in benefit of the customer. They can choose how and where they bank – at any time of night or day. We are at an inflexion point, not just in our bank's history, but in the context in which we're operating. With the country's banking sector going through almost two decades of recovery, it is fitting that growth is now at the top of the national agenda. With the right foundations and support in place, financial services can help to unlock the investment required to create high-quality jobs, improve our country's infrastructure and boost growth across every region and nation of the UK. NatWest Group is ready to step up to this challenge. And we could not have done it without the support of the taxpayer 17 years ago. We are in a position where we have moved on from the issues of the past, without forgetting the lessons. We have the scale and presence in communities around the country and, crucially, a strong balance sheet which means we can lend to our customers and help drive economic growth. We are here to support the ambitions of people throughout the UK, turning possibilities into progress. Whether that is helping a family to buy a home, supporting an entrepreneur to start their first business or providing a growing firm with the insights and funding to create jobs and access new markets. Ultimately, that is what a bank should do.
Yahoo
6 days ago
- Business
- Yahoo
UK taxpayers no longer own NatWest - but 17 years on, are banks safer from collapse?
The Treasury has announced the sale of its final shares in the NatWest Group. It means the bank will be under full private ownership, almost two decades after it was bailed out by the taxpayer amid the 2008 financial crisis. This marks a symbolic end to a dramatic chapter in British banking history. It was gone midnight – the early hours of Monday 13 October 2008 - when Chancellor Alistair Darling turned in for the night, leaving a team of officials, surrounded by curries and pizza boxes, finalising the detail of the biggest state intervention in the private sector since World War Two. The next morning he announced the first instalment of a rescue that would cost the taxpayer more than the entire defence budget. In total the government spent £45bn (£73bn in today's money), buying an 84% stake in the Royal Bank of Scotland (RBS), which now trades as part of the NatWest Group. At the time, RBS's balance sheet (outstanding loans) was bigger than the entire UK economy. Its collapse would have devastated it. The question is, why has it taken some 17 years for the Treasury to sell the last of its stake? And given that in the decades since fresh risks have emerged - including the threat of a cyber attack from a hostile state - how vulnerable does that leave UK banks today? Are they still "too big to fail", as they were widely described in 2008 - and were Britain to face another financial crisis, would the taxpayer have to step in once again to deliver a bailout? The current chair of NatWest group, Rick Haythornthwaite, has told the BBC that the bank and its employees remain thankful for that intervention in 2008. "The main message to the taxpayer is one of deep gratitude," he says. "They rescued this bank. They protected the millions of businesses and home-owners and savers." A lot has changed since 2008. Gone are £1.5 trillion in outstanding loans, gone are tens of thousands of employees in job cuts, and gone is around £10bn of taxpayers' money – never to be recouped. The amount spent by the government looks like a poor investment, but as Baroness Shriti Vadera – former senior adviser to the government and chair of asset manager Prudential - told the BBC, this wasn't an investment, it was a rescue. "Nationalising RBS was hardly a voluntary investment," she says. "What was important then was assessing the impact of RBS and other banks on the overall economy and in particular the ability to keep functioning – lending, putting cash in ATMs. "It was never about saving the banks, it was about saving the economy from the banks." The consequences of a banking collapse would have been serious. The prime minister, Gordon Brown, even talked about putting soldiers on the streets. In a book by ex-Labour spin doctor Damian McBride, Brown is quoted as saying: "If the banks are shutting their doors, and the cash points aren't working, and people go to Tesco and their cards aren't being accepted, the whole thing will just explode. "If you can't buy food or petrol or medicine for your kids, people will just start breaking the windows and helping themselves." RBS was of course not the only bank that faced collapse. A tsunami of bad loans had been triggered by an earthquake in the US mortgage market. Risky loans to borrowers with low credit ratings had been packaged up and sold to banks around the world. By 2007, no-one knew exactly where these grenades were hidden in bank balance sheets, so they all stopped lending to each other – which saw the whole global financial system seize up. Northern Rock relied on borrowing funds to finance its own risky mortgages and in 2007, the BBC reported that it had turned to the Bank of England for help. This prompted a "run on the bank", which finally saw it fully nationalised in February 2008. Andrew Bailey, the governor of the Bank of England, worked as the Bank's Chief Cashier during those turbulent months. He says if the state hadn't nationalised RBS, the costs would have been "incalculable". "It would have been huge, because we were talking about the collapse of the banking system as we knew it at that time," recounts Bailey. US Banks were also in deep distress. In March 2008, Bear Stearns was absorbed by Wall Street rival JP Morgan. In September of that year, US mortgage giants Fannie Mae and Freddie Mac were nationalised. Here in the UK, HBOS was absorbed by Lloyds and then of course, Lehman Brothers failed – defying expectations that the US government would step in to save it. But for the UK economy, RBS was the big one. The UK had a large banking sector, compared to the size of its economy; and within that mix, RBS was a particularly important bank. The once sedate RBS had become in some measure the biggest bank in the world. In 2000, it bought NatWest and just a year before the crash, it had bought Dutch bank ABN Amro. Its buccaneering boss Fred Goodwin had been knighted for his services to banking. But Mr Goodwin became a lightning rod for public outrage at the risks banks had taken and the bonuses their executives had collected. He left with an annual pension of £700,000 but was later stripped of his knighthood. The years following the rescue saw thousands of companies complain that the bankers RBS appointed to help them out of the crisis were driving them to the wall, forcing them into bankruptcy or selling their businesses at knock-down prices. RBS was the poster child for banking recklessness, hubris, greed and cruelty. Why then did it take so long for the government to sell out of RBS - at a loss of £10bn? At the same time the government took a stake in RBS, it also took a stake in Lloyds. But that was sold in May 2017, yielding a profit of £900m. RBS was infinitely more complicated than Lloyds as it had a large US business which was the subject of lengthy investigations by the US Department of Justice. The prospect of heavy fines hung over the bank for many years and proved well-founded when it was fined $4.9bn (£3.6bn) in 2018 for its role in the US mortgage crisis. RBS was also a pretty unattractive investment. It announced a £24bn loss for 2008 – the biggest loss in UK corporate history. It made losses every year until 2017. With the shares depressed by these concerns, the government was reluctant to sell its stake at low prices as it would crystallise a politically uncomfortable loss for the taxpayer. After all, following 2010, austerity was the name of the game and the then-Chancellor George Osborne could ill afford to be seen to be chalking up losses by selling RBS shares when he was making cuts elsewhere. But many think that was a mistake as – chicken and egg-like – it prolonged the reluctance of private shareholders to buy stakes in a company majority-owned by the government. As Baroness Vadera puts it: "I'm not sure it was necessary to take 17 years to reverse out of the shares." Mr Haythornthwaite, who took on the role of NatWest Group chairman in April last year, describes the sale of the final shares as a "symbolic" moment for the bank, its employees, investors - but also on a wider scale. "I hope it's a symbolic moment for our nation [too]," he says. "That we can put this behind us. It allows us to truly look to the future." But how exactly does that future look - and have lessons from the past really been learnt? Andrew Bailey certainly thinks so. He says that if a bank faces collapse now, it's less likely the taxpayer will have to step in. There are now alternative methods of rescuing a failing bank, he says, including buying assets and providing emergency cash. "The big distinction is that we think we can handle [bank crises] without using public money," Bailey says. "The critical thing is that we have to preserve the continuity of their activities, because they are critical to the economy … critical to people. "When we say we've solved 'too big to fail', to be precise, I think what we mean is we don't need public money." It is true that the Bank of England now stress-tests banks much more rigorously to see how they would cope under pressures like a collapse in house prices, rocketing unemployment or rampant inflation. Sir Philip Augar, a veteran of the City of London and author of multiple books on banking, agrees that British banks are in a more resilient position now than they were in 2008 - essentially because they hold more cash in their coffers, rather than just relying on debt. "What's happened to improve things since then is that the amount of leverage in the system has come right down, and the capital cushion that banks have to hold […] has increased substantially. So it's less likely now that a bank would collapse - but it's not impossible." Today, there are also new risks to consider. Take the series of cyber attacks that recently hit the systems of household names like Marks and Spencer, Co-op and Harrods. Should an attack take out critical banking functions like business lending, company payrolls and ATMs, it would be far more damaging. Indeed, in what he calls the "league table" of financial risks, Andrew Bailey identifies the threat of a cyber attack as a rapidly growing one. "Of course you have to mitigate it, but [cyber] is a risk that will never go away, because it continually evolves," he says. "We're dealing with bad actors who will continually refine the lines of attack. And I always have to say to institutions, 'You've got to continue to work at this'." Recent bank collapses in the US – like Signature Bank and Silicon Valley Bank - have highlighted another major risk. Customers don't have to queue round a block to get their money out; it can be done with the stroke of a key on a laptop or mobile in seconds. Banks are built on trust: customers put money in, believing they can get it out again whenever they want. And a good old-fashioned bank run is now a modern digital bank run. But banks are still not like normal companies. They are not standalone entities but interconnected, and together they form the bloodstream of the economy. They are the arteries through which credit is extended, wages are paid, savings are stashed or withdrawn. And when those arteries get blocked, bad things happen. That is as true today as it was in 2008. BBC InDepth is the home on the website and app for the best analysis, with fresh perspectives that challenge assumptions and deep reporting on the biggest issues of the day. And we showcase thought-provoking content from across BBC Sounds and iPlayer too. You can send us your feedback on the InDepth section by clicking on the button below. Gold is booming - but investors lured in by the hype could lose out, warn experts Xi's real test is not Trump's trade war The secretive US factory that lays bare the contradiction in Trump's America First plan
Yahoo
6 days ago
- Business
- Yahoo
NatWest boss thanks British taxpayer for 2008 bailout after government sells remaining shares
The Chairman of NatWest has thanked British taxpayers for bailing out the bank during the 2008 financial crisis, as it returns into private ownership after 17 years. Rick Haythornthwaite, who succeeded Sir Howard Davies as chairman in April last year, expressed "gratitude to the taxpayer" for rescuing the bank, adding that the company had not forgotten "the lessons of the past" even as it pushes for changes to regulations that were introduced after the . Mr Haythornthwaite said the bank was in a reflective mood. "It's about a desire to express gratitude to the taxpayer. They not just rescued this bank, they protected millions of savers, of businesses, of homeowners. "From the bank's standpoint, it gave us the opportunity to completely restructure into a much safer and stronger bank." He spoke to Sky News as the government completed the sale of its remaining stake in the bank, formerly known as RBS, 17 years after a £46bn taxpayer-funded bailout that left the state with an 83% stake in the bank. Sky News' city editor Mark Kleinman broke the news at the weekend that the selloff was imminent and predicted that the taxpayers would lose about £10.2bn on the bailout. The government confirmed a £10.5bn loss on Friday. The government began unwinding its stake in 2021 and completed the sale today, posting a final loss of £10.5bn, and closing the door on one of the most turbulent periods in British economic history. It was also one of the most controversial periods. The bank bailouts, orchestrated by Alistair Darling and Gordon Brown, attracted public anger and scrutiny of the excessive risk-taking that took place in the City. A swathe of new regulations were implemented following the crisis, including new rules that forced banks to ring-fence their core retail banking arms from their investment arms, as well as a cap on bonuses. Read more from Sky News: While at the time the changes were viewed as necessary, Mr Haythornthwaite said the regulatory "pendulum may have swung too far." He said Britain had high-quality regulation, but there was scope to eliminate duplication in some areas. He said the current regime was compounding costs and inhibiting growth. "The regulator stepped in very necessarily 17 years ago and raised the standards it expects of banks, of their leaders, of people working in those places. It made demands of the culture and demands of its service to customers. All that is very right," Mr Haythornthwaite said. "Inevitably, the pendulum can swing slightly too far. One may question whether it's swung slightly too far, but I use the word 'slightly'." The Chancellor is receptive to his arguments. In her search for economic growth, Rachel Reeves is eyeing up the City. In a Mansion House speech last year, she said that some of those post-2009 reforms had "gone too far." The bonus cap, first implemented by the EU, has already been lifted, and major banks, including NatWest, are now calling for an end to ring-fencing too. The Chancellor has said she is "open-minded" about the idea. Some may be more nervous about that idea, less than two decades after the biggest bank bailout in history, but Mr Haythornthwaite said: "We're not going to forget the lessons of the past," adding: "This is not about triggering a race to the bottom. "It's very clear to me that this is a very different place. There's a focus on the ethics of running a bank, of really focusing on customers," he said. "This is not a place where we are looking for quick wins to serve the few."
Sky News
6 days ago
- Business
- Sky News
NatWest boss thanks British taxpayer for 2008 bailout after government sells remaining shares
The Chairman of NatWest has thanked British taxpayers for bailing out the bank during the 2008 financial crisis, as it returns into private ownership after 17 years. Rick Haythornthwaite, who succeeded Sir Howard Davies as chairman in April last year, expressed "gratitude to the taxpayer" for rescuing the bank, adding that the company had not forgotten "the lessons of the past" even as it pushes for changes to regulations that were introduced after the financial crisis. Mr Haythornthwaite said the bank was in a reflective mood. "It's about a desire to express gratitude to the taxpayer. They not just rescued this bank, they protected millions of savers, of businesses, of homeowners. "From the bank's standpoint, it gave us the opportunity to completely restructure into a much safer and stronger bank." He spoke to Sky News as the government completed the sale of its remaining stake in the bank, formerly known as RBS, 17 years after a £46bn taxpayer-funded bailout that left the state with an 83% stake in the bank. The government began unwinding its stake in 2021 and completed the sale today, posting a final loss of £10.5 billion, and closing the door on one of the most turbulent periods in British economic history. It was also one of the most controversial periods. The bank bailouts, orchestrated by Alistair Darling and Gordon Brown, attracted public anger and scrutiny of the excessive risk-taking that took place in the City. A swathe of new regulations were implemented following the crisis, including new rules that forced banks to ring-fence their core retail banking arms from their investment arms, as well as a cap on bonuses. While at the time the changes were viewed as necessary, Mr Haythornthwaite said the regulatory "pendulum may have swung too far." He said Britain had high-quality regulation, but there was scope to eliminate duplication in some areas. He said the current regime was compounding costs and inhibiting growth. "The regulator stepped in very necessarily 17 years ago and raised the standards it expects of banks, of their leaders, of people working in those places. It made demands of the culture and demands of its service to customers. All that is very right," he said. "Inevitably, the pendulum can swing slightly too far. One may question whether it's swung slightly too far, but I use the word 'slightly'." The Chancellor is receptive to his arguments. In her search for economic growth, Rachel Reeves is eyeing up the City. In a Mansion House speech last year, she said that some of those post-2009 reforms had "gone too far." The bonus cap, first implemented by the EU, has already been lifted, and major banks, including NatWest, are now calling for an end to ring-fencing too. The Chancellor has said she is "open-minded" about the idea. Some may be more nervous about that idea, less than two decades after the biggest bank bailout in history, but Mr Haythornthwaite said: "We're not going to forget the lessons of the past," adding: "This is not about triggering a race to the bottom. "It's very clear to me that this is a very different place. There's a focus on the ethics of running a bank, of really focusing on customers," he said. "This is not a place where we are looking for quick wins to serve the few." Please refresh the page for the fullest version.
Bloomberg
27-05-2025
- Business
- Bloomberg
NatWest Gets Ready for Life After UK Government Ownership
Freed from the clutches of government ownership, NatWest Group Plc is getting ready to chart its own course for the first time in almost two decades. The UK has less than 1% remaining of its crisis-era holding in the lender and could sell out any day now. While the moment is mostly symbolic for Chief Executive Officer Paul Thwaite and Chairman Rick Haythornthwaite, getting the government off the shareholder register will be the final step in shedding NatWest's reputation as a beleaguered bank that was almost destroyed by an acquisition spree 17 years ago.
