Natwest’s chairman thanked UK taxpayers for the bank’s 2008 relief just weeks before the bank returned to private ownership, ensuring shareholders that their bosses have “fixed past issues” and will not “open a flood of risk” despite government pressure.
Rick Haythornthwaite commented that a small group of shareholders gathered on Wednesday at the Gogerburn campus in suburbs of Edinburgh for the bank’s annual investors meeting.
He said Natwest, formerly known as the Royal Bank of Scotland (RBS), benefited from taxpayers in the £46 billion rescue package that had floated banks during the financial crisis.
The relief was designed by former Prime Minister Alistair Darling and later Prime Minister Gordon Brown.
“It is important to recognize the bold decisions made by the government on the day to intervene and stabilize the banking system, and by the economy, I said in my speech on Wednesday.
“We are extremely grateful to the government and UK taxpayers for the intervention and support that protected millions of savers, homeowners and businesses during the global crisis.”
He argued that the boss “fixed past issues” and that it was a “a much simpler, safer, customer-focused bank.”
Glasgow-based shareholder Mark Turnbull (66), says he has been stuck at the bank for 21 years. “Some people here said years ago, ‘This is a dead bank.’ [terms of] That lost money and government relief,” Turnbull said.
It costs a lot to the public. The government is expected to recover roughly £25 billion of the £460 billion spent on rescue of Natwest in 2008, with its shares being sold at less than 500p purchased. On Wednesday, Natwest shares were trading at around 475p.
However, Haythornthwaite said the government is always expected to lose money in bailouts. “I don’t think it’s an investment that they got into this. It was a sector rescue and they did well as a result… They protected millions of homeowners and businesses, and… savers,” Natwest chairman said.
Demonstrators of the extinction rebellion camped outside the AGM to protest the amendments to banks’ policies, fearing they opened the door to further funding for oil and gas companies, including BP. “Do your best from Natwest, BP Divest, Divest,” they chanted..
There was speculation about whether Natwest would consider expanding after the remaining 2.99% of the government’s stake was sold, but the boss insisted there were no plans for a new international venture or a major risk-taking move.
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It continues to be a conservative project that called for more risk-taking the citywide to promote UK growth despite government pressure with Prime Minister Rachel Reeves. This prompted a wave of regulatory reforms, including removing bonus caps for bankers who previously restricted performance-based payouts to double the pay.
Haythornthwaite said it was a “point of change.” “After nearly 20 years of recovery for our banks and our country and economy, growth is at the top of the national agenda. And despite ongoing geopolitical uncertainty, competition and innovation are refocused.”
However, even if the banks boosted the payments of CEO Paul Twight, the chairman argued that it didn’t aim to encourage excessive risk-taking with a big bonus.
Natwest has increased Thwaite maximum payments by 43%, giving you the opportunity to earn up to 7.7 beans years. If Natwest shares rise 50%, that figure could skyrocket to £9.5 million. Natwest revived executive bonus payments in 2022 and previously scrapped them under an order by Prime Minister George Osborne.
“So we attract the best talent, maintain the best talent, and motivate them. But let’s not open the floodgates of risk exposure. Don’t forget the lessons we learned before 2008.
Shareholders approved the new policy on Wednesday, with almost 98% of the votes backed.
Peter Gifford, a dedicated shareholder since 2002, said bank bosses would be wise to move cautiously. “We live in difficult times so we will stay like you and pilot the stable courses going forward,” he said.
