Outlook: NatWest puts on a brave face

ON the new savings schemes, Bodycote's rights issue and natwest's excuses

A personal letter to the shareholders of National Westminster Bank from the chairman Lord Alexander, and the chief executive, Derek Wanless. Dear shareholder. It looks bad, doesn't it? But in fact it isn't. Actually it's very good news for all of us really. Let's get the bad news over with first. Totting up all the costs associated with our withdrawal from equities trading, we've arrived at a grand total of pounds 637m, which will be charged to group profits this year.

That includes everything, you understand - trading losses, restructuring charges, that wretched options mispricing business and a wacking great post budget adjustment to finance lease receivables, whatever they are. By the way, this last item definitely wasn't our fault, and as for the rest, that can all largely be blamed on NatWest Markets' former chief executive, Martin Owen, who we have now fired.

We feel sure that you will give us credit, both for the speed with which we have grasped the nettle and disposed of these businesses, and for the openness with which we have detailed the damage. The same cannot be said of that mob round at Barclays, who have not yet said how much their own parallel withdrawal from BZW is costing them.

Now for the good news. The very fact that we are getting all this out of the way now will enable us to deliver substantial improvements in our performance in 1998 and thereafter - pounds 637m of improvement, to be precise. You can't say fairer than that, can you? As it turns out, these businesses were tying up a huge amount of capital - what we in banking call "weighted risk assets" - which is now available for use elsewhere. Given our record, you can surely rely on us to squander this money elsewhere now that it has been released. Ha, ha! Only joking. Actually, we intend to return a big chunk of it to you the shareholders. So you see it has all worked out rather well in the end.

A chapter is closed and we now offer a new beginning, new horizons, bigger and greater things....Oh all right then. Enough is enough and we agree to go quietly when suitable replacements are found.

Yours apologetically, etc etc, signed in the chairman's absence, squiggle, squiggle, PA to the chairman of National Westminster Bank.

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