Natwest becomes latest bank to bring back its dividend – despite setting aside £3.2bn to cover bad loans and recording a £351m loss last year
Change of direction: Natwest chief executive Alison Rose
Natwest has become the latest bank to bring back its dividend – despite setting aside £3.2billion to cover bad loans and recording a £351m loss last year.
The lender said it would hand out 3p per share, in a welcome move for pension funds and savers who have been starved of income from the industry after the Bank of England imposed a temporary ban on payouts last year.
The dividend will also be welcomed by Chancellor Rishi Sunak, who is desperate for any money to boost the Treasury’s coffers, as the Government will receive £225m of the payout.
The taxpayer still owns 62 per cent of Natwest following its £45.5bn bailout during the financial crisis.
But the dividend came as chief executive Alison Rose confirmed that the bank would be pulling out of the Republic of Ireland, where it operates under the Ulster Bank brand, selling its loan book in the country.
It is the second major shake-up from Rose, coming just a year after she announced dramatic plans to slash the size of Natwest’s investment bank and change the group’s name from Royal Bank of Scotland.
Dan Lane, a senior analyst at fintech firm Freetrade, said: ‘Alison Rose is making a name for herself as a no-nonsense leader, keeping the core business healthy by adding to its core business and chopping off the gangrenous limbs.
‘That ruthless streak will serve her well in a year that’s likely to be even harder than the last.’
Rose, who became the first woman to ever lead a major British bank when she was appointed in 2019, said Natwest was already in talks to sell off parts of the Irish business to Allied Irish Bank and Permanent TSB. She added that it was offloading the division because it ‘will not be able to generate sustainable long-term returns for our shareholders’. But the news sparked concern among trade unions.
Unite’s national officer for finance, Rob MacGregor, said: ‘Natwest has declared its intention to exit the Republic of Ireland and so wind down Ulster Bank, leaving 3,000 workers unsure of their futures.
‘It is a matter of deep concern not just for the staff, but the bank’s customers, given that Ulster Bank has roots stretching back to the 1830s.’
Unite has written to Rose asking her to postpone all job losses until the full impact of the pandemic on the business had been evaluated.
The £351m loss meant Natwest cut its bonus pool to the lowest level since the financial crisis. Bankers will share out £206m, down a third from a year earlier.
Since Rose took over at RBS – as Natwest was known until last year – she has been trying to cut costs at the beleaguered bank and boost its share price to allow the Government to finally sell its stake. The Treasury is likely to lose billions of pounds on the 2008 bailout.
Rose has been slimming down the bloated investment bank, and is pushing more customers online to allow Natwest to cut its branch network as she wants to shave down costs by 4 per cent each year.
She said: ‘Our branch network is incredibly important to us, and it’s been a real lifeline to customers particularly during Covid.
‘But what we have seen is an acceleration in customer behaviour in terms of use of digital.
‘So we’ll keep our network under review on a regular basis, but we will be guided by our customer behaviour.’
From next year until 2023, Natwest has pledged to distribute at least £800m to shareholders.
Natwest shares shot up 5.2 per cent, or 8.85p, to 180.15p yesterday.