The CEO of NatWest has predicted that there will be more consolidation in the UK banking industry over the coming years. Speaking at the Goldman Sachs European Financials Conference in Madrid, NatWest boss Paul Thwaite also stated that his bank would be open to acquisitions, providing they meet their criteria.
There have been a number of mid-sized banking sector deals in the UK over recent years and activity has ramped up in 2024, with deals including Coventry Building Society’s £780 million agreement to acquire the Co-Operative Bank, Barclays’ acquisition of most of Tesco Bank and, the biggest deal of all, Nationwide’s £2.9 billion takeover of Virgin Money.
Thwaite commented that this activity has been “interesting, but not a surprise.” He said there was “a degree of inevitability” about recent M&A in the sector, as a result of “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.”
Thwaite continued that he thinks there is a high chance for further consolidation across the market: “Assuming the macro doesn’t change, I think we’ll see more consolidation over the course of the next couple of years.”
Regarding his own bank’s activity, Thwaite said that acquisitions were a possibility, but that NatWest would operate with “a very clear lense” and that any potential deal would need to “offer compelling shareholder value and compelling strategic rationale, so strategic congruence.”
Thwaite cited NatWest’s 2020 deal to acquire a £3 billion mortgage portfolio from Metro Bank as a transaction “that added scale to our mortgage business and healthy returns”.
He also mentioned the bank’s 2021 acquisition of RoosterMoney, a pre-paid debit card and cash management app for children. Thwaite said that NatWest was “now number one new market share in that segment”, with the deal demonstrating that “where we can add capability that really improves proposition, we’ll do that.”
Last year, NatWest was reportedly interested in acquiring a further £3 billion of Metro Bank’s mortgage book and the bank has also been mentioned as a potential buyer in the mid-sized banking space, for example if a new parent company puts TSB Bank up for sale.
However, Thwaite emphasised that any potential NatWest acquisitions would need to clear “quite a high bar”, citing the attractiveness of buybacks and the bank’s target for returns. He added that NatWest would be “very disciplined” and “very focused” when it comes to any potential new deals.
Read about M&A trends in the UK financial services sector
