National Westminster Bank Plc, better known by its
trading name
NatWest, is a
commercial bank in the United Kingdom that
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
The bank
can trace its roots back to 1650 with the foundation of Smith's of
Nottingham
. The creation of the modern bank was
announced in 1968 and National Westminster Bank Limited commenced
trading on 1 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 (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. 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, National Westminster Bank of Canada
, NatWest
Australia Bank and opening branches on the
European continent and in the Far
East. 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.
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. 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. The North American operations were sold to
Fleet Bank and
Hongkong Bank of Canada respectively.
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 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.
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 became 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. While NatWest was
retained as a distinct brand, many back office functions were
merged with those of the Royal Bank leading to over 18,000 job
losses.
Divestment
In 2008, it was announced that
HM
Government would take a stake of up to 58% in the Royal Bank of
Scotland in a move aimed at recapitalising the Group.
HM Treasury
subscribed for £5 billion in preference shares and
underwrote the issuance of £15bn of new ordinary shares offered to
RBS shareholders and new institutional shareholders at the fixed
price of 65.5p. As a consequence of the mismanagement which
necessitated this rescue, the chief executive,
Sir Fred Goodwin (who secured the takeover
of NatWest), offered his resignation which was duly accepted.
Chairman,
Sir Tom McKillop, also
confirmed he would stand down from that role when his contract
expired in 2009. Goodwin was replaced by
Stephen Hester, previously chief executive of
British Land. Subsequently, in 2009, it was announced that Royal
Bank branches in England and Wales (until 1985,
Williams & Glyn's Bank)
together with NatWest branches in Scotland were to be divested by
the Group under the revived Williams & Glyn's brand, to comply
with
European Union state aid
requirements. The process could take up to four years to
complete.
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 RBS Coutts Bank (formerly
Coutts Bank von Ernst) Ltd. trading as RBS Coutts International in
Switzerland;
- Greenwich Capital Markets Inc., securities broker-dealer,
trading as RBS Greenwich
Capital (formerly Greenwich NatWest) 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 has 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 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. 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. From autumn 2009, NatWest and RBS are migrating debit
cards from Maestro and
Solo to
Visa Debit. The bank participates fully
in the
Faster Payments
Service, an initiative to speed up certain payments, launched
in 2008. Established in 1989, Streamline is the leading provider of
merchant accounts in Europe, giving businesses the ability to
accept credit and debit card payments and handling around half of
all such transactions. In 2009 it was merged into
RBS WorldPay.
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. National
Westminster Bank use the following series of
sorting codes,
these are six digits long formatted into three pairs and separated
by hyphens:—
| Range |
Note |
| 01 |
former District Bank Ltd. |
| 50–59 |
former National Provincial Bank Ltd. |
| 55 |
in use by Isle of Man Bank Ltd. |
| 60–66 |
former Westminster Bank Ltd. |
| 18 |
for use of Coutts & Co. |
| 98 |
for use of Ulster Bank Ltd. |
International Bank
Account Numbers take the form
GBxx NWBK ssss ssaa aaaa
aa, where
xx refers to a check digit,
s
to the sorting code and
a to the account number.
The
Bank Identifier Code, or
SWIFT
code, for NatWest (and Isle of Man Bank) is NWBKGB2L (8 digits) or NWBKGB2Lxxx (11
digits).
Litigation
The so-called
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 do not 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. On 22 February 2008 they were
each sentenced to 37 months in prison.
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 maintained that its
charges were fair and enforceable and stated it intended to defend
its position vigorously.
On 24 April 2008, 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. On 26 February 2009, the Court of
Appeal
ruled that fees for unauthorised overdrafts and
bounced cheques are subject to regulation by the OFT under these
rules.
In September 2009, NatWest and RBS both announced dramatic cuts in
their overdraft fees. The unpaid item fee was reduced to £5 from
£38 and the card misuse fee was reduced from £35 to £15.
The cuts
come at a time when the row over the legality of unauthorised
borrowing, estimated to earn current account providers about £2.6bn
a year, had reached the House of Lords
.
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
- Samuel Smith & Co. The Royal Bank of
Scotland Group, Archive Guide (retrieved 5 April 2009)
- National Westminster Bank Act 1969 and National Westminster
Bank Act 1969 (Appointed Day) Order 1969; registered in England and
Wales under the Companies Act 1985, No. 929027
- When did the Royal Bank and NatWest introduce their
brand marks? The Royal Bank of Scotland Group, Frequently Asked
Questions (retrieved 8 January 2008)
- Hast, Adele (ed.) Company History: National Westminster Bank
International Directory of Company Histories (vol.2) St.
James Press, Chicago, 1988
- History of Plastic Cards The Association for
Payment Clearing Services, 9 January 2006
- 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
- See National Westminster Bank Plc and NatWest
Australia Ltd. v the Commissioners of the State Bank of
Victoria [1985] VSC 4148 (Unreported, Southwell J. 24
October 1985)
- A short history of National Westminster Bank
The Royal Bank of Scotland Group, 2005
- International Westminster Bank Act 1989 (cap. 16); see International Westminster Bank The Royal Bank
of Scotland Group, Archive Guide (retrieved 19 November 2007)
- Famous tower sold for top price BBC News, 17
July 1998 19:59 BST
- Pain, Steve British Land snaps up NatWest building The
Birmingham Post, 17 January 2007
- 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
- National Westminster Bank loses fight for
independence BBC World Service, broadcast 25 February 2000
- De Baróid, Ciarán Ballymurphy and the Irish War
(p.325) Pluto Press, London, 2000
- Wolfe, Eric Case Study: NatWest Markets BancWare ERisk,
October 2001
- SFA Disciplines NatWest and Two Individuals
Financial Services Authority, 18 May 2000
- Natwest Group Announces £1,011m Profit for 1997
PR Newswire Europe, 1998
- Buckingham, Lisa et al. NatWest pounces on L&G with £11bn takeover bid The
Guardian, 3 September 1999
- Treanor, Jill and Buckingham, Lisa NatWest forced to defend merger The Guardian, 7
September 1999
- NatWest rejects takeover bid Guardian
Unlimited, 24 September 1999
- Farrelly, Paul RBS issues ultimatum in £27bn bid for NatWest
The Observer, 28 November 1999
- Treanor, Jill NatWest runs up white flag The Guardian, 12
February 2000
- NatWest takeover battle BBC News, 11 February
2000 09:53 GMT
- DeCarlo, Scott (ed.) The World's 2,000 Largest Public Companies
Forbes Magazine, Special Report, 29 March 2007
- UK banks' £37bn bail-out unveiled BBC News, 13
October 2008 12:09 BST
- Announcement on the APS and State Aid
Discussions The Royal Bank of Scotland Group, Company
Announcements, 3 November 2009
- Scottish Branch Sale National Westminster Bank
(retrieved 23 November 2009)
- Dey, Iain RBS to relaunch historic Williams & Glyn's
brand after 24 year absence The Sunday Times, 13 September
2009
- Hosking, Patrick Williams & Glyn's bank could make comeback
The Times, 15 September 2009
- Kightly, Charles Enjoy Medieval Denbighshire (p.10) Denbighshire County
Council, September 2007
- Annual Report and Accounts 2006 Operating
and financial review, Description of business (p.46) The Royal
Bank of Scotland Group, 28 February 2007
- Annual Report and Accounts 2006 Notes on
the accounts (14) Investments in Group undertakings (p.32)
National Westminster Bank, 28 March 2007
- Incorporated with unlimited liability. Registered in England
and Wales No. 36695. Authorised and regulated by the FSA, Register
No. 122287
- Incorporated in the State of Delaware, File No. 2075209.
Registered in England and Wales No. FC015070
- Registered in Northern Ireland No. R733. Authorised and
regulated by the FSA, Register No. 122315
- Annual Report and Accounts 2002 Report of
the directors, Activities and business review (p.2) National
Westminster Bank, 27 February 2003
- Annual Report and Accounts 2005 Report of
the directors, Activities and business review (p.2) National
Westminster Bank, 29 March 2006
- Annual Report and Accounts 2000 Report of
the directors, Activities and business review (p.17) National
Westminster Bank, 28 February 2001
- NatWest Launches First Dedicated Polish Bank
Account in Britain National Westminster Bank, Press Room, 15
January 2007
- NatWest To Launch Mobile Banking Service
National Westminster Bank, Press Room, 11 July 2005
- Your Mortgage Magazine Awards 2006–2007 Your
Mortgage Magazine, 9 February 2007
- 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
- Osborne, Hilary Contactless payments point to cash-free future
Guardian Unlimited, 4 September 2007
- Bank issues net security device BBC News, 2
October 2007 13:38 BST
- Welcome to Visa Debit National Westminster Bank
(retrieved 23 November 2009)
- Faster Payments - how long? BBC News, 24 May
2008 11:40 BST
- RBS Launches RBS WorldPay brand The Royal Bank
of Scotland, 18 April 2009
- Entered in the Register under No. 121878
- Registered in England and Wales No. 1449354. Authorised and
regulated by the FSA, Register No. 313223
- Registered in England and Wales No. 2668470. Authorised and
regulated by the FSA, Register No. 155329
- Registered in England and Wales No. 1959479. Authorised and
regulated by the FSA, Register No. 124395
- NatWest Three: the US indictment BBC News, 12
July 2006 22:51 BST
- Randall, Jeff Natwest Three caught on extradition's one-way
street The Daily Telegraph, 1 March 2006
- Try Natwest three in UK - Tories BBC News, 6
July 2006 17:23 BST
- Enron charge trio facing US trial BBC News, 24
May 2005 16:04 BST
- King, Oliver Lib Dem leader joins bankers' extradition
battle The Guardian, 4 July 2006
- Stevenson, Tom Senior executives attack 'invidious, one-sided
treaty' The Daily Telegraph, 6 July 2006
- Clark, Andrew NatWest Three plead guilty to wire fraud Guardian
Unlimited, 28 November 2007
- NatWest Three face jail sentence BBC News, 29
November 2007 09:10 GMT
- The Unfair Terms in Consumer Contracts Regulations
1999 (SI 1999/2083), implements Directive 93/13/EC (L95 OJ
29)
- Collinson, Patrick Have you been stung by exorbitant bank charges?
Guardian Unlimited, 20 February 2007
- Results for the Half Year Ended 30 June 2007
Notes (6) Litigation (p.10) National Westminster Bank, 26
September 2007
- The Office of Fair Trading v Abbey National Plc and
seven others [2008] EWHC 875 (Comm); All ER (D) 349
(Apr)
- Osborne, Hilary Bank charges ruling paves way for refunds The
Guardian, 26 February 2009
- Jones, Rupert Royal Bank of Scotland and NatWest cut overdraft
charges The Guardian, 7 September 2009
- Osborne, Hilary Bank charges appeal reaches House of Lords The
Guardian, 23 June 2009
See also
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