NWM insiders believe that the market making and distribution elements of the equity operations are most at risk, since they appear to be incompatible with the parent bank's ambitions to develop high-value, niche businesses.
The bank has not ruled out sweeping reductions in the size and scope of the equities business in the pursuit of better long-term returns. The derivatives operations could be subjected to a similar scaling back.
NatWest believes it is important to have a presence in both equities and derivatives to support the investment bank's other activities. However, these could be restricted to the main financial markets and offered on a significantly reduced level.
One key aspect of the review will be to assess which parts of the equities and derivatives operations can be delivered more profitability by contracting them out to other suppliers.
When NatWest issued a profits warning last week, the equities business was singled out as one that was not yet delivering the required level of performance.
This underperformance is attributed to the extensive investment in building up the sales and trading operations.
An NWM spokeswoman could give no insight into the direction the review of the investment banking business is taking but insisted that the equities operations had a bright future.
"Our equity business is very strong," she said. "We have been investing in it and believe that investment will be profitable in the long run."
However, others are less optimistic. A key element of the review will be a clearer definition of profitability. NatWest is keen to maximise its returns on capital employed and will not tolerate underperforming assets.
Already the big-ticket corporate lending business has been identified as one that does not fit into the vision for NWM's long-term strategy since returns are poor.
The same accusation could be levelled at the market making activities, where the spokeswoman admitted margins were slim. One of the justifications for maintaining a significant equities presence is that it is seen as a prerequisite for competing in the international market place with the big US and Continental banks.
NWM insiders now believe, however, that there is growing disenchantment at head office with the notion that size is the key to long-term profitability. But they accept that there is a continued commitment from the parent bank to develop a profitable investment banking business.
The global debt and financial markets businesses, treasury and corporate advisory businesses are all regarded as integral to the investment bank's future. All the recently acquired investment banking businesses are therefore seen as secure.
It is also accepted that NatWest will impose a more disciplined approach to the management of the investment banking business.
The weaknesses in risk management and control were clearly identified by NWM's surprise pounds 77m loss in its interest-rate derivatives arm, which prompted the latest review.
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