Everything about Natwest totally explained
National Westminster Bank Plc, or NatWest as it's commonly known, is a
commercial bank in the
United Kingdom which has been part of
The Royal Bank of Scotland Group Plc since 2000. It was established in 1968 by the merger of
National Provincial Bank (established 1833 as National Provincial Bank of England) and
Westminster Bank (established 1834 as London County and Westminster Bank). Traditionally considered one of the
Big Four clearing banks, NatWest has a large network of 1,600
branches and 3,400
cash machines across
England and Wales and offers 24-hour
Actionline telephone and online banking services. Today it has more than 7.5 million personal customers and 850,000 small business accounts.
History
Although the bank can trace its roots back to 1650 with the foundation of Smiths of
Nottingham, its creation was announced in 1968 and National Westminster Bank Limited commenced trading on
01 January 1970, after the statutory process of integration had been completed in 1969. The famous three arrowheads symbol was adopted as the new bank's logo; said either to symbolise circulation of money in the financial system or the bank's three constituents, National Provincial, Westminster and
District Bank, the latter being taken over by National Provincial Bank in 1962 and allowed to operate under its own name until the formation of National Westminster Bank. The District, National Provincial, and Westminster Bank were fully integrated in the new firm's structure, while
Coutts & Co. private bankers (a 1920 National Provincial acquisition, established 1692),
Ulster Bank in
Northern Ireland (a 1917 Westminster acquisition, established 1836) and the
Isle of Man Bank (a 1961 National Provincial acquisition, established 1865) continued as separate operations. Duncan Stirling, chairman of Westminster Bank, became first chairman of the fifth largest bank in the world. In 1969 David Robarts, former chairman of National Provincial, assumed Stirling's position. In 1975 it was one of the first
London banks to open a representative office in
Scotland. It was a founder member of the Joint Credit Card Company (with
Lloyds Bank,
Midland Bank and the
Royal Bank of Scotland) which launched the
Access credit card (now
MasterCard) in 1972 and in 1976 it introduced the
Servicetill cash machine. The same banks (although this time not including Lloyds) were later responsible for the introduction of the
Switch debit card (now branded
Maestro) in 1988.
Expansion
Deregulation in the 1980s, culminating in the
Big Bang in 1986, also encouraged the bank to enter the securities business. County Bank, its
merchant banking subsidiary formed in 1965, acquired various
stockbroking and jobbing firms to create the investment banking arm County NatWest. National Westminster Home Loans was established in 1980 and other initiatives included the launch of the Piggy Account for children in 1983, the Credit Zone, a flexible overdraft facility on which customers only pay interest (now commonplace, this so-called
pink debt was innovative when launched) and the development of the
Mondex electronic purse (later sold to MasterCard Worldwide) in 1990.
The Action Bank advertising campaign spearheaded a new marketing-led approach to business development. The bank also expanded internationally, forming National Westminster Bancorp in the
United States of America with a network of 340 branches across two states, and opening branches on the
European continent and in the
Far East. Completed in 1980, it built the iconic
National Westminster Tower in
London to serve as its headquarters. At a height of 600 feet (183 m) it was the tallest building in the UK until the topping-out of
Canary Wharf Tower 10 years later, its footprint in the shape of the bank's logo. Also worthy of note is
National Westminster House in
Birmingham, no longer owned by the bank, the building was most recently sold to
British Land.
Controversy
The bank's expansion strategy hit trouble with the
stock market crash of 1987 and involvement in the financial scandal surrounding the collapse of
Blue Arrow. The
Department of Trade and Industry report on the affair was critical of the bank's management and resulted in the resignation of several members of the board, including then chairman
Lord Boardman. Later, the bank would divest its overseas subsidiaries. In 1996 the US bank branches were sold to
Fleet Bank. Thereafter the bank concentrated on its core domestic business as the restyled NatWest Group, reflecting its modern positioning as a portfolio of businesses. In 1993 the NatWest Tower was devastated by a
Provisional IRA bomb and the bank vacated the building, subsequently selling it. Then in 1997 NatWest Markets, the corporate and
investment banking arm formed in 1992, revealed a £50m loss had been discovered, escalating to £90.5m after further investigations. Investor and shareholder confidence was so badly shaken that the
Bank of England had to instruct the
board of directors to resist calls for the resignation of its most senior executives in an effort to draw a line under the affair. The bank's internal controls and risk management were severely criticised in 2000 and its aggressive push into investment banking questioned, after a lengthy investigation by the Securities and Futures Authority. The bank's move into complicated derivative products that it didn't fully understand seemed to indicate poor management. By the end of 1997 parts of NatWest Markets had been sold, others becoming Greenwich NatWest in 1998.
Takeover
In 1999 NatWest announced a merger with
Legal & General in a friendly £10.7bn deal, the first between a bank and an insurance company in UK history. The move received a poor reception in the London financial markets, and NatWest's share price fell substantially. In response, the Governor and Company of the
Bank of Scotland began a hostile takeover bid for the bank, an audacious move for the much smaller Scottish bank. The Bank of Scotland's aim was to break-up the NatWest Group and dispose of its non-retail assets. NatWest was forced to abandon its merger, but refused to agree to a takeover by a rival bank. The
Royal Bank of Scotland tabled another hostile offer and trumped the Bank of Scotland with a £21bn bid. The takeover of NatWest in early 2000 was the biggest in UK history. National Westminster Bank, once Britain's most profitable bank, was delisted from the
London Stock Exchange and became, with its subsidiaries, component parts of The Royal Bank of Scotland Group. The outcome of this bitter struggle set the tone for a round of consolidation in the financial sector as it prepares for a new age of fierce global competition. The Royal Bank of Scotland Group is the second largest bank in the UK and Europe and the fifth largest in the world by
market capitalisation. According to
Forbes Global 2000, it's currently the 13th largest company in the world.
Structure
The Royal Bank of Scotland Group Plc operates internationally through its two principal subsidiaries, the Royal Bank and NatWest. The NatWest group of companies comprises National Westminster Bank Plc and its subsidiary and associated undertakings. The principal subsidiary undertakings of the bank today are:
- Coutts & Co., part of RBS Group Wealth Management, incorporating Coutts Bank von Ernst Ltd. in Switzerland;
- Greenwich Capital Markets Inc., securities broker-dealer, trading as RBS Greenwich Capital in the US; and
- Ulster Bank Limited, incorporating, from 2001, Ulster Bank Ireland Ltd. in the Republic of Ireland.
Until 2003 National Westminster Bank was a wholly-owned subsidiary of The Royal Bank of Scotland Group, now the ultimate holding company. In January 2003 ownership of the bank's entire issued ordinary share capital was transferred from the ultimate holding company to The Royal Bank of Scotland Plc, as holding company. At that time the entire issued share capital of
Lombard North Central Plc was transferred by the bank to the holding company. Ownership of National Westminster Home Loans Limited was passed to the holding company in December 2005. In December 2000 the bank transferred National Westminster Life Assurance Limited to RBS Life Investments Limited, effectively establishing the business as a joint venture between the Group and
Norwich Union.
The Royal Bank of Scotland Group comprises the ultimate holding company and its subsidiary and associated undertakings. The Group is structured into the following main operating areas:
Retail Markets, providing a broad range of retail services across different brands and channels to personal and small business customers;
Corporate Markets, a leading banking partner to UK commercial customers and major corporations and governmental institutions around the world, providing an extensive range of debt, risk and investment services;
RBS Insurance, the second-largest general insurer in the UK, with brands including Direct Line, Churchill and Green Flag;
Ulster Bank Group, incorporating First Active Plc in the Republic of Ireland; and
Citizens Financial Group, which provides retail and corporate banking services across 13 states in the northeastern and midwestern US, with a retail and commercial presence in more than 30 other states.
Services
NatWest provide a full range of banking and insurance services to personal, business and commercial customers, including the first dedicated bank account in Britain to be delivered and supported entirely in the Polish language. In 2005 it announced the reintroduction of a mobile banking service, providing banking facilities to remote communities in Cornwall. The bank have won Your Mortgage Magazine's Best Bank for Mortgages award 13 times in the last 17 years, more than any other lender. Many documents and publications bear the
Crystal Mark.
» Lord Alexander of Weedon QC FRSA, Chairman 1989–1999
In an effort to enhance security, hand-held devices for use with a card to authorise online banking transactions were introduced in 2007. These card readers don't retain personal information but verify numbers during a transaction. In 2006 The Royal Bank of Scotland Group undertook the first trial of PayPass contactless debit and credit cards in Europe. These can be used to pay for purchases under £10 by tapping an enabled card on the retailer's terminal.
The bank is authorised and regulated by the Financial Services Authority, a member of the Financial Ombudsman Service, the Financial Services Compensation Scheme, the Association for Payment Clearing Services and of the British Bankers' Association; it subscribes to the Banking Code and Business Banking Code. Mortgages, available in England, Scotland and Wales only, are provided by National Westminster Home Loans Limited, a member of the Council of Mortgage Lenders, the NatWest One account is a secured personal account with the Royal Bank of Scotland Plc. The Spanish Mortgage is provided by Adam and Company Plc, a subsidiary of the Royal Bank of Scotland, trading as NatWest. NatWest Insurance Services is a trading name of RBS Business Insurance Services Limited, acting as intermediary and broker for general insurance. Life Protector and Guaranteed Bond products are provided by National Westminster Life Assurance Limited. The Royal Bank of Scotland International Limited, trading as NatWest Offshore, operates branches in Jersey, Guernsey, the Isle of Man and Gibraltar. Share dealing services are provided by NatWest Stockbrokers Limited, which is a member of the London Stock Exchange and PLUS. NatWest Stockbrokers is operated by a joint venture between The Royal Bank of Scotland Group and the Toronto-Dominion Bank, TD Waterhouse Investor Services (Europe) Limited. The bank is a member of the Cheque and Credit Clearing Company Limited, Bankers Automated Clearing Services Limited, the Clearing House Automated Payment System Limited and the LINK Interchange Network Limited.
Litigation
The NatWest Three — Giles Darby, David Bermingham and Gary Mulgrew — were extradited to the United States in 2006 on charges relating to a transaction with Enron Corporation in 2000 while they were working for Greenwich NatWest. It has been argued that the alleged crime was committed by British citizens living in the UK against a British company based in London and therefore, any resulting criminal case falls under the jurisdiction of the English courts. However, the Serious Fraud Office decided not to prosecute due to lack of evidence. There has been criticism that the Americans don't have to produce a prima facie case, or even a reasonable one, to extradite British citizens, whereas no such facility exists to extradite US citizens to the UK. On 28 November 2007 the three admitted one charge of wire fraud after a plea bargain. They will be sentenced on 22 February 2008 and look set to face a 37 month prison sentence.
Following discussions between the Office of Fair Trading, the Financial Ombudsman Service, the Financial Services Authority and the major banks, proceedings were issued on 27 July 2007 in a test case against the banks to determine the legality and enforceability of certain charges relating to unauthorised overdrafts. It is argued that these are contrary to The Unfair Terms in Consumer Contracts Regulations 1999; Schedule 2(e) of which gives a non-exhaustive list of terms which may be regarded as unfair, such as a term requiring a consumer who fails in his obligation to pay a disproportionately high sum in compensation. Penalty charges are irrecoverable at common law. The precedent for this was Dunlop Pneumatic Tyre Co. Ltd. v New Garage and Motor Co. Ltd. [1915] AC 79 along with Murray v Leisure Play [2005] EWCA Civ 963, where it was held that a contractual party can only recover damages for an actual loss or liquidated losses. The Royal Bank of Scotland Group maintains that its charges are fair and enforceable and has stated it intends to defend its position vigorously. The High court found that although these charges couldn't constitute penalties, they're challengeable under the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999.
Sponsorship
The name NatWest has been associated with two major cricket tournaments held in England. From 1981 until 2000, the bank was the title sponsor of English domestic cricket's main limited-overs knockout tournament, which was known as the NatWest Trophy during that period. Since 2000, the NatWest Series has been an annual one-day international tournament involving England and two visiting international teams. NatWest were also a main sponsor of the 1999 Cricket World Cup, held in England.
Additionally, Natwest is the largest sponsor for the south of England's Premier paintball league. The Natwest Southern Paintball League, or NSPL, is the leading competitive paintball series in the South of England. Being the largest sponsor, the league agreed to add "Natwest" t the league's name.
Further Information
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