The chairman of NatWest has vowed not to forget “the lessons of pre-2008” on senior staff bonuses when the bank returns to full private ownership, 16 years after being bailed out by the Government.
Rick Haythornthwaite, speaking at the bank’s annual general meeting (AGM) in Edinburgh on Wednesday, said the bank had now “fixed the issues of the past” and had become a “simpler, safer, customer-focused bank”.
He also thanked UK taxpayers for their “intervention and support”, and said the Government’s decision to “rescue” the bank during the 2008 financial crisis had “protected millions of savers, homeowners and businesses at a time of global crisis”.
The AGM saw the bank’s shareholders vote on 26 separate resolutions, all of which passed – including one that saw an increase in the level of bonuses payable to the bank’s executive directors (EDs).
This will see the maximum bonus for an ED rise from being equal to their salary to being 1.5 times the level of their salary.
Speaking after the AGM, Mr Haythornthwaite described the increase in the level of performance-linked pay as “very measured”, and said it would make the bank more competitive at attracting and retaining “the best talent”.
He went on: “But let’s not open up the floodgates of risk exposure, let’s not forget the lessons of pre-2008 where it all got a bit out of sync.
“We don’t think we’re close to testing the limits of that. It’s not as if we’ve expressed an upper limit here.
“But I think it was a good opportunity to make the shift and remain in sensible territory for the recognition that others are pushing the boundaries.”
Chief executive Paul Thwaite said shareholders had been “supportive” of the change, and said they prefer a “philosophy” whereby good performance is rewarded.
During his AGM speech Mr Haythornthwaite said that after nearly two decades of recovery, growth was now “top of the national agenda”.
He continued: “And, despite ongoing geopolitical uncertainty, competition and innovation are in focus once more.
“It is clear that the rhetoric is changing and we must keep up the momentum in order to create a secure, competitive environment that promotes growth, all in the service of the customer.”
Speaking afterwards Mr Thwaite acknowledged the “volatile” state of the markets in the wake of US President Donald Trump’s tariffs, but said the bank had not yet seen a change in consumer behaviour.
“We’re doing a lot of monitoring of the retail customer base, the commercial customer base, the corporate customer base,” the chief executive said.
“I think in terms of reaction, inevitably, it starts first in the corporate base, (which is) concerned about the uncertainty, thinking about what some of the medium-term impacts might be of the trade policies.
“In the consumer base, we haven’t seen any material changes yet in actual behaviour.
“In sentiment surveys, there’s definitely more kind of uncertainty and a little bit more concern about what the outlook may be. But that’s more in sentiment than it is in actual changing behaviours.”
During the AGM the board also faced a number of questions about the bank’s dealings with fossil fuel companies, with members of Share Action asking whether it would commit to not watering down its policies on the environment.
Mr Haythornthwaite responded that oil and gas represented a small fraction of NatWest’s business, and that as the bank was currently in the process of reviewing its climate targets he could not make any commitments on policy at this stage.
The AGM, held at NatWest’s head office in Edinburgh, comes as the Government’s shareholding in the bank has dropped below 3%, and is expected to hit zero by the middle of the year.
At the end of 2023, the shareholding was at 40%, but the Treasury has been accelerating efforts to offload its stake by selling shares to retail investors and into the public market.
NatWest received bailouts worth £45.4 billion funded by taxpayers during the financial crisis in 2008 and 2009, helping stabilise the country’s banking sector.
A spokesman for the Treasury said the bailout was to “protect financial stability in the UK, with the independent OBR (Office for Budget Responsibility) stating that not intervening would likely have had much greater social and economic costs”.
He added: “We continue to sell down our NatWest shareholding and expect to fully dispose of this by the end of 2025-26, when market conditions allow and it represents value for taxpayers’ money to do so.”
