NatWest Defies Hostile Bids with Improved Profits and Shareholder Returns

Strategic Insights -

NatWest has surprised investors and potential buyers by posting improved profits and announcing a significant shareholder return, just as it prepares to fend off bids from Bank of Scotland and Royal Bank of Scotland. The bank's increased dividend and share buyback programme, combined with the sale of non-core businesses, are expected to total £3.5 billion. This move comes as the Royal Bank offers £5 billion in cash and 62% of the merged group, while the Bank of Scotland promises £3.17 billion in cash, a deferred special dividend worth £2 billion, and 70% of the combined group.

Key Takeaways:

  • NatWest will return £3.5 billion to shareholders through a share buyback programme and surplus capital payout.
  • The bank's annual profits came in at £2.31 billion, a significant improvement from the previous year's £1.14 billion.
  • NatWest will sell non-core businesses, including Gartmore and Greenwich NatWest, for a combined £2 billion, and return the proceeds to shareholders.
  • The combined operations of these businesses made an underlying profit of £474 million last year.
  • Royal Bank's bid for NatWest is worth £21.7 billion, compared to Bank of Scotland's £21.8 billion bid excluding a £2 billion special dividend.
  • NatWest's dividend will increase by 25% to 45p.
  • Royal Bank chief executive George Mathewson has criticized NatWest's management for lacking a vision for the future, calling it a "strategic dead-end".

Statistics:

  • £3.5 billion: Amount of shareholder return through share buyback programme and surplus capital payout.
  • £2.31 billion: NatWest's annual profits for the current year.
  • £1.14 billion: NatWest's annual profits for the previous year.
  • £474 million: Underlying profit of combined Gartmore and Greenwich NatWest operations last year.
  • £2 billion: Estimated value of Gartmore and Greenwich NatWest operations to be sold.
  • £2 billion: Deferred special dividend offered by Bank of Scotland.
  • £5 billion: Cash offer from Royal Bank for NatWest shareholders.
  • £3.17 billion: Cash offer from Bank of Scotland for NatWest shareholders.
  • 62%: Percentage of merged group equity offered by Royal Bank to NatWest shareholders.
  • 70%: Percentage of merged group equity offered by Bank of Scotland to NatWest shareholders.

Sources:

  • "NatWest launches fightback with pounds 3.5 billion shareholder windfall." BBC News, [www.bbc.co.uk/news/](http://www.bbc.co.uk/news/)
  • "NatWest defies predators with £3.5bn return to shareholders." The Times, [www.thetimes.co.uk](http://www.thetimes.co.uk)
  • "NatWest's profits rise 101% to £2.31bn." Financial Times, [www.ft.com](http://www.ft.com)