The NatWest jigsaw is still missing some vital pieces

Martin Owen, the preternaturally calm chief executive of NatWest Markets, the whizzy investment banker, must be ruing a comment he made only five days ago, at the time of the annual results: "We now have an organic strategy, particularly in our equity derivatives business." Oops! Not quite there yet, Martin: a rogue trader in the sterling futures unit has since been revealed to have dropped pounds 50m. But this should not detract from the underlying investment case for NatWest - which is where the real problem lies.

The group remains an enigma to many in the City. Its core retail banking business presented a respectable picture at the results, but the group lags behind Lloyds TSB, Barclays and HSBC. It has expanded its presence in US investment banking with the purchase of Gleacher. In London it paid top dollar for Hambro Magan, the corporate finance boutique. And it bought Gartmore for its expertise in fund management.

Yet it pulled out of the bidding for Scottish Amicable, saying the price was too high. This begs the question of how important a life business is to long-term strategy. NatWest's own life operation is still tiny. So is life insurance an essential ingredient, or will it be discarded? NatWest may have aspirations as a "bancassurance" player, but caution seems to be the word.

Caution was also emphasised by Lord Alexander, the chairman, who said the group will refuse to get caught again by the boom-bust of the lending cycle. It will be a smart trick if it can pull it off - few banks succeed.

So where does that leave the shares? With excess capital pouring out of its ears, it can afford another big deal. Or it can concentrate on share buybacks.

Bank shares have been on a remarkable rally in recent months. But NatWest was weak on the results and the shares continue to droop. With other bank shares bid up so high, there is little value elsewhere in the sector. While NatWest has got parts of its strategy right, there are still some essential pieces missing from the jigsaw. Sell.