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NatWest

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National Westminster Bank Plc
Company typePublic Limited Company
IndustryFinancial Services
Founded1968
Headquarters135 Bishopsgate,
London EC2M 3UR
Key people
Sir Thomas McKillop, Chairman and Sir Frederick Goodwin, Chief Executive
ProductsBanking and Insurance
Number of employees
33,300
ParentRoyal Bank of Scotland Group
SubsidiariesNational Westminster Home Loans, National Westminster Life Assurance
Websitehttp://www.natwest.com/

National Westminster Bank Plc, or NatWest as it is 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 Great Britain 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

Template:Details3 Although the bank can trace its roots back to 1650 with the foundation of Smith's 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.[1] 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,[2] National Provincial, Westminster, and District Bank (established 1829), 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. Westminster Foreign Bank (established 1913) was restyled International Westminster Bank in 1973. Duncan Stirling, outgoing 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.[3] 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.[4]

Expansion

The NatWest branch at Leighton Buzzard, Bedfordshire, an example of Neo-Renaissance architecture.

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.[5] 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.[6] In 1982, the Frankfurt office of International Westminster Bank was merged with Global Bank AG to form Deutsche Westminster Bank and in 1988, National Westminster Bank SA was incorporated and took over the bank's six branches in France and Monaco. In 1989, International Westminster Bank was merged into National Westminster Bank by Act of Parliament as there was no longer any advantage in operating separately.[7] Completed in 1980, the bank 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.[8] 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.[9]

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.[10] 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.[11] In 1993 the NatWest Tower was devastated by a Provisional IRA bomb and the bank vacated the building, subsequently selling it.[12] 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.[13] 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.[14] The bank's move into complicated derivative products that it did not 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.[15]

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.[16] The move received a poor reception in the London financial markets, and NatWest's share price fell substantially.[17] 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.[18] The Royal Bank of Scotland tabled another hostile offer and trumped the Bank of Scotland with a £21bn bid.[19] 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.[20] 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.[21] The Royal Bank of Scotland Group is now the second largest bank in the UK and Europe (after HSBC) and the fifth largest in the world by market capitalisation. According to Forbes Global 2000, it is currently the 13th largest company in the world.[22]

On 13 October 2008, it was announced that HM Government could potentially take a 63% stake in the Royal Bank of Scotland in a move aimed at recapitalising the Group. HM Tresury will subscribe for £5 billion in Preference shares and underwrite the issuance of £15bn of new shares available at the fixed price of 65.5p offered to RBS shareholders and new instituitional shareholders. [23]

Structure

The old court house at Ruthin, Denbighshire, built in 1401, now a NatWest branch.

The Royal Bank of Scotland Group Plc operates internationally through its two principal subsidiaries, the Royal Bank and NatWest.[24] The NatWest group of companies comprises National Westminster Bank Plc and its subsidiary and associated undertakings.[25] The principal subsidiary undertakings of the bank today are:

  • Coutts & Co., part of RBS Group Wealth Management, incorporating RBS Coutts Bank (formerly Coutts Bank von Ernst) Ltd. trading as RBS Coutts International in Switzerland;[26]
  • Greenwich Capital Markets Inc., securities broker-dealer, trading as RBS Greenwich Capital in the US;[27] and
  • Ulster Bank Limited, incorporating, from 2001, Ulster Bank Ireland Ltd. in the Republic of Ireland.[28]

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.[29] Ownership of National Westminster Home Loans Limited was passed to the holding company in December 2005.[30] 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.[31]

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.[32] In 2005 it announced the reintroduction of a mobile banking service, providing banking facilities to remote communities in Cornwall.[33] The bank has won Your Mortgage Magazine's Best Bank for Mortgages award 13 times in the last 17 years, more than any other lender.[34] Many documents and publications bear the Crystal Mark.

NatWest is committed to using clear language. Using plain English is not just a good intention. It is a business necessity. We are working more closely with Plain English Campaign. We do not see them as a supplier to be dealt with at arm's length. We see the Campaign as a partner, to be involved from the beginning to the end of a project

Lord Alexander of Weedon QC FRSA, Chairman 1989–1999

In 2006 The Royal Bank of Scotland Group undertook the first trial of PayPass contactless debit and credit cards in Europe.[35] These can be used to pay for purchases under £10 by tapping an enabled card on the retailer's terminal.[36] 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 do not retain personal information but verify numbers during a transaction.[37] The bank participates fully in the Faster Payments Service, an initiative to speed up certain payments, launched on 27 May 2008.[38] Streamline, a NatWest service, is the leading provider of merchant accounts in Europe, giving businesses the ability to accept credit and debit card payments. It handles around half of all such transactions.

The bank is authorised and regulated by the Financial Services Authority,[39] 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,[40] 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.[41] 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,[42] 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

Signage on the NatWest branch at Saint Helier, Jersey in the Channel Islands.

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.[43] It has been argued that the alleged crime was committed by British citizens living in the UK against a British company based in London[44] and therefore, any resulting criminal case falls under the jurisdiction of the English courts.[45] However, the Serious Fraud Office decided not to prosecute due to lack of evidence.[46] There has been criticism that the Americans do not have to produce a prima facie case, or even a reasonable one, to extradite British citizens,[47] whereas no such facility exists to extradite US citizens to the UK.[48] On 28 November 2007 the three admitted one charge of wire fraud after a plea bargain.[49] On 22 February 2008 they were each sentenced to 37 months in prison.[50]

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.[51] 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.[52] The Royal Bank of Scotland Group maintains that its charges are fair and enforceable and stated it intended to defend its position vigorously.[53] The High Court found that although these charges could not constitute penalties, they are challengeable under the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999.[54]

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.

NatWest is the largest sponsor of the Natwest Southern Paintball League, the leading competitive paintball series in the south of England.

References

  1. ^ Registered in England and Wales No. 929027
  2. ^ When did the Royal Bank and NatWest introduce their brand marks? The Royal Bank of Scotland Group, Frequently Asked Questions (retrieved 8 January 2008)
  3. ^ Hast, Adele (ed.) Company History: National Westminster Bank International Directory of Company Histories (vol.2) St. James Press, Chicago, 1988
  4. ^ History of Plastic Cards The Association for Payment Clearing Services, 9 January 2006
  5. ^ Srivastava, Lara and Mansell, Robin Electronic Cash and the Innovation Process: A User Paradigm Electronic Working Papers Series, no.23 (p.5) University of Sussex, Science Policy Research Unit, March 1998
  6. ^ A short history of National Westminster Bank The Royal Bank of Scotland Group, 2005
  7. ^ International Westminster Bank The Royal Bank of Scotland Group, Archive Guide (retrieved 19 November 2007)
  8. ^ Famous tower sold for top price BBC News, 17 July 1998 19:59 BST
  9. ^ Pain, Steve British Land snaps up NatWest building The Birmingham Post, 17 January 2007
  10. ^ Stanley, Christopher Cultural Contradictions in the Legitimation of Market Practice: Paradox in the Regulation of the City in Budd, Leslie and Whimster, Sam (eds.) Global Finance and Urban Living: A Study of Metropolitan Change (pp.158-160) Routledge, London, 1992
  11. ^ National Westminster Bank loses fight for independence BBC World Service, broadcast 25 February 2000
  12. ^ De Baróid, Ciarán Ballymurphy and the Irish War (p.325) Pluto Press, London, 2000
  13. ^ Wolfe, Eric Case Study: NatWest Markets BancWare ERisk, October 2001
  14. ^ SFA Disciplines NatWest and Two Individuals Financial Services Authority, 18 May 2000
  15. ^ Natwest Group Announces £1,011m Profit for 1997 PR Newswire Europe, 1998
  16. ^ Buckingham, Lisa et al. NatWest pounces on L&G with £11bn takeover bid The Guardian, 3 September 1999
  17. ^ Treanor, Jill and Buckingham, Lisa NatWest forced to defend merger The Guardian, 7 September 1999
  18. ^ NatWest rejects takeover bid Guardian Unlimited, 24 September 1999
  19. ^ Farrelly, Paul RBS issues ultimatum in £27bn bid for NatWest The Observer, 28 November 1999
  20. ^ Treanor, Jill NatWest runs up white flag The Guardian, 12 February 2000
  21. ^ NatWest takeover battle BBC News, 11 February 2000 09:53 GMT
  22. ^ DeCarlo, Scott (ed.) The World's 2,000 Largest Public Companies Forbes Magazine, Special Report, 29 March 2007
  23. ^ UK banks' £37bn bail-out unveiled BBC News, 13 October 2008 12:09 BST
  24. ^ Annual Report and Accounts 2006 Operating and financial review, Description of business (p.46) The Royal Bank of Scotland Group, 28 February 2007
  25. ^ Annual Report and Accounts 2006 Notes on the accounts (14) Investments in Group undertakings (p.32) National Westminster Bank, 28 March 2007
  26. ^ Incorporated with unlimited liability. Registered in England and Wales No. 36695. Authorised and regulated by the FSA, Register No. 122287
  27. ^ Incorporated in the State of Delaware, File No. 2075209. Registered in England and Wales No. FC015070
  28. ^ Registered in Northern Ireland No. R733. Authorised and regulated by the FSA, Register No. 122315
  29. ^ Annual Report and Accounts 2002 Report of the directors, Activities and business review (p.2) National Westminster Bank, 26 February 2003
  30. ^ Annual Report and Accounts 2005 Report of the directors, Activities and business review (p.2) National Westminster Bank, 29 March 2006
  31. ^ Annual Report and Accounts 2000 Report of the directors, Activities and business review (p.17) National Westminster Bank, 28 February 2001
  32. ^ NatWest Launches First Dedicated Polish Bank Account in Britain National Westminster Bank, Press Room, 15 January 2007
  33. ^ NatWest To Launch Mobile Banking Service National Westminster Bank, Press Room, 11 July 2005
  34. ^ Your Mortgage Magazine Awards 2006–2007 Your Mortgage Magazine, 9 February 2007
  35. ^ Royal Bank of Scotland Group and Mastercard Join Forces for London Roll-out of Contactless Debit and Credit Cards MasterCard Europe, Press Release 6, 4 May 2007
  36. ^ Osborne, Hilary Contactless payments point to cash-free future Guardian Unlimited, 4 September 2007
  37. ^ Bank issues net security device BBC News, 2 October 2007 13:38 BST
  38. ^ Faster Payments - how long? BBC News, 24 May 2008 11:40 BST
  39. ^ Entered in the Register under No. 121878
  40. ^ Registered in England and Wales No. 1449354. Authorised and regulated by the FSA, Register No. 313223
  41. ^ Registered in England and Wales No. 2668470. Authorised and regulated by the FSA, Register No. 155329
  42. ^ Registered in England and Wales No. 1959479. Authorised and regulated by the FSA, Register No. 124395
  43. ^ NatWest Three: the US indictment BBC News, 12 July 2006 22:51 BST
  44. ^ Randall, Jeff Natwest Three caught on extradition's one-way street The Daily Telegraph, 1 March 2006
  45. ^ Try Natwest three in UK - Tories BBC News, 6 July 2006 17:23 BST
  46. ^ Enron charge trio facing US trial BBC News, 24 May 2005 16:04 BST
  47. ^ King, Oliver Lib Dem leader joins bankers' extradition battle The Guardian, 4 July 2006
  48. ^ Stevenson, Tom Senior executives attack 'invidious, one-sided treaty' The Daily Telegraph, 6 July 2006
  49. ^ Clark, Andrew NatWest Three plead guilty to wire fraud Guardian Unlimited, 28 November 2007
  50. ^ NatWest Three face jail sentence BBC News, 29 November 2007 09:10 GMT
  51. ^ The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083), implements Directive 93/13/EC (L95 OJ 29)
  52. ^ Collinson, Patrick Have you been stung by exorbitant bank charges? Guardian Unlimited
  53. ^ Results for the Half Year Ended 30 June 2007 Notes (6) Litigation (p.10) National Westminster Bank, 26 September 2007
  54. ^ Office of Fair Trading v Abbey National and Others [2008] EWHC 875 (Comm); All ER (D) 349 (Apr)

See also

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