Business Outlook: There's life in old NatWest yet

Derek Wanless, chief executive of National Westminster Bank, seems to be on good form at the moment, despite the pounding he's taken in the press and the City. Perhaps it has something to do with Barclays and the fiasco of the BZW breakup. Suddenly it is Martin Taylor, the blue-eyed boy of the banking sector, who is uncomfortably in the news, and not Mr Wanless.

But it may also be down to the fact that after all the trials and tribulations of the past six months, NatWest is beginning to emerge from the shadows with a reasonably good story to tell. This is not the basket case it was widely depicted as. If recent events have helped to galvanise the organisation, that is all to the good. Unlike its main high street rivals, NatWest has plenty of scope for improvement.

Mr Wanless has set himself challenging targets for return on capital over the next two years and he's determined to meet them. As the stock market has begun to appreciate, there's an upside here in a way there perhaps isn't at Lloyds TSB and Barclays. If a bidder pops up along the way, no one's going to quarrel too much with that. Either way shareholders win.

Nor does the demise of BZW's global ambitions necessarily mean that NatWest Markets must go the same way. The main clearing bank has already stripped its treasury functions out of NatWest Markets in a way which would seem to indicate that the investment bank is being groomed for sale. For the time being, however, that is not the intention. NatWest continues to believe there's a place for NatWest Markets, if not as a competitor to the bulge bracket investment banks of Wall Street, certainly as a big league player in European markets.

For evidence of life in the old organisation yet, just look at yesterday's securitisation of $5.5bn of corporate loans. This is the second such exercise undertaken by NatWest Markets on behalf of its parent and means that NatWest has now securitised the bulk of its big, blue-chip corporate lending book. In so doing the bank has released a big chunk of capital from a low-margin area of the business without in any way interfering with the relationship it has with those clients. That money is now available to be returned to shareholders, or reinvested elsewhere. NatWest has been genuinely innovative in embarking on this process, and others are now following its lead. One swallow does not a summer make, but judging by the share price, spring certainly seems to be well on the way at NatWest.