Judge and Jury: Has NatWest’s reputation become trapped in a black hole? - NatWest’s failure to see the writing on the wall and reassure the City has fuelled a stream of speculation, says James Poole, managing director of Shandwick Consult

Is NatWest about to be taken over because a backstairs cabal of the most powerful City investment managers has lost all faith in the management?

Is NatWest about to be taken over because a backstairs cabal of the

most powerful City investment managers has lost all faith in the


That was the titbit served up by City hacks two weeks ago to a

gossip-starved City.

Why has the City made such a meal of it? And has NatWest made the

situation worse or better? Where did it all start? And could the stream

of speculation have been stemmed before it became a flood? Was it news

manipulation in an overheated market in bank shares or was it just

NatWest’s turn?

Probably the least remarked aspect of this sea change in the image of

the UK’s largest and most solidly-based high street bank is the radical

shift in the balance of power in finance over the past six months. The

flotations of the Halifax and other building societies has totally

changed the banking terrain of Britain.

It seems NatWest recognised the significance of this. They made a

surreptitious approach to try to take over ex-building society rival

Abbey National.

If the board had managed to pull this off and had taken any trouble to

get their City communications right in advance, they would have been

hailed triumphant. But the reverse was true.

This was compounded by the pounds 90 million ’black hole’ in the books

of NatWest Markets. The head of the investment bank Martin Owen fell on

his sword to a background of personality assassination and a never-very

convincing internal enquiry. The staff of the bank, incensed for months

after a forced marriage to George Magan’s mergers boutique and swathes

of redundancies, were hardly allies. And after all that history, some

wag in the HQ bunker was heard to say: ’We might just get rid of it all

- it’s not that important.’

At which point the City’s collective patience seems to have cracked.

Past NatWest disasters were dragged out of collective memory. The bank’s

response was to publicy announce the cancellation of chairman

Alexander’s junket to the Hong Kong handover ’in order to reassure City


Thereby of course, confirming they needed it.

NatWest has been unlucky in circumstance, didn’t see the writing on the

wall until too late and then badly misread its audience. Rebuilding its

City and internal reputations, if it have the will to pull it off, will

be a long-term project that needs to start tomorrow. But amazing as it

will seem, many of the punters will be blissfully unaware, and the

majority of the rest won’t care very much at all.

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