More jobs to go as NatWest plans 300 branch closures
Indications that the bank's intensive slimming programme is still on course came as NatWest completed a pounds 451m share buy-back at 626p a share to distribute surplus capital to shareholders.
Derek Wanless, chief executive, said: "We see a significant further reduction in jobs on top of the significant reductions we have seen in the last few years - that is an industry-wide trend." He refused to predict the number of jobs still to go, saying unions and staff would be told first.
He also said NatWest had achieved half the 10 percentage-point reduction it planned in the ratio of costs to its income in the UK, which has fallen to 67.8 per cent over the last year.
NatWest warned the ratio might rise in the second half-year because of spending on new technology, and that progress towards the 63 per cent target, which has been set for the end of the decade, would be "lumpy".
NatWest will have cut almost 1,000 branches between 1992 and 2000. In the last five years it has eliminated 30,000 jobs in the UK, offset by only 10,000 new ones. In the latest six months it has cut 1,500 jobs after a reduction of 2,300 in the second half of last year.
Mr Wanless made clear NatWest would still like to use some of its money to buy a life insurance company, but no deal is imminent. He said: "We currently see no opportunities that meet all our acquisition criteria."
After the bank gave the spare cash in its kitty back to shareholders, the price slipped 12p to 616p, which dealers said was because institutions that took the money would not be able to trade for some while. If they did, the Inland Revenue might question their tax rebates on the buy-back cash.
NatWest's pre-tax profits were down from pounds 872m a year ago to pounds 302m in the latest half-year, a consequence of write-downs and integration costs that confused the results. But underlying pre-tax profit rose 23 per cent.
After including paper losses on the disposal of Bancorp in the United States - because of recent accounting rules on the treatment of goodwill - NatWest went into the red, losing pounds 282m after tax and dividends in the half year, compared with a profit of pounds 439m a year earlier. The interim dividend is up 14 per cent.
There was a sharp rise in bad debt at the Lombard finance house, from pounds 51m to pounds 74m because of a rush of bad loans mainly to young and low income customers for electronics goods such as mobile phones.
But down-payments and age limits are being raised and the subsidiary is being restructured by Stewart Legg, a new chief executive who took over this month. Mr Wanless saw it as an example of banks spotting problems earlier than in the past. He said "We are at the stage in the economic cycle when traditionally banks have made mistakes."
NatWest Markets, the investment bank, made pounds 261m before tax compared with pounds 209m a year ago. Dealing income was pounds 305m compared with pounds 261m a year earlier.
Investment Column, page 18
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