Poor results deepen NatWest gloom

The pressure on NatWest's embattled management team moved up another notch yesterday after the banking group published a weak set of annual results.

Group profits fell by 10 per cent, and the bank admitted to difficulties in several of its non-core businesses, in particular NatWest Markets, the investment banking business, and Coutts, the Queen's bankers.

The only cheer for NatWest shareholders was the prospect of a share buy- back. The bank announced it intend to return capital to shareholders, but declined to detail the timing and the size.

Lord Alexander, the bank's chairman, said: "1997 was a difficult year, and our overall results were poor". Derek Wanless, chief executive, called the group's figures "disappointing". He added: "NatWest Markets had a dreadful year last year. It pulled down the performance of the whole of the group".

Before tax, NatWest Markets lost pounds 706m in the year to December, a fall of pounds 804m. Profits at Coutts, the private banking group, fell by 72 per cent after bad debt provisions rose by more than 700 per cent to pounds 76m. Mr Wanless said the provisions related to "a small number of isolated lending problems" in the US, but declined to elaborate further on the precise nature of the difficulties.

The name NatWest Markets is to disappear once the group has completed the sale of its equities business later this year. NatWest Markets' debt business will be rebranded Greenwich NatWest and its corporate advisory business is also to be renamed.

Mr Wanless poured cold water on recent industry rumours the bank could merge with Barclays, one of its main rivals, after an initial approach from Martin Taylor, Barclays' chief executive, last summer. Mr Wanless said the competition authorities would be unlikely to approve such a move and the process of merger would damage both banks' franchises. Mr Wanless said he was more receptive, however, to a link-up with a company in the insurance or mortgage industry.

Analysts reacted unenthusiastically both to the results and to Mr Wanless's moves to quash merger speculation. NatWest shares finished the day at 1104p, down 21p.

Investment column, page 22

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