Wanless could net pounds 1m in a NatWest takeover

The chief executive of National Westminster, Derek Wanless, would qualify for a pounds 1m payoff in the event of a takeover of the bank, it has emerged. He would benefit from a clause in his service agreement that replaces his one-year notice period with one of three years if there is a change in control of the bank.

The terms of Mr Wanless's service agreement, which appear to present the bank's head with a conflict of interest, are likely to face criticism from NatWest's institutional investors if they are viewed as being a reward for failure.

Internal controls at NatWest have come under scrutiny this year following a pounds 90m loss in the derivatives trading arm of the investment bank, NatWest Markets. The losses led to the resignation of NWM's chief executive, Martin Owen, but there have also been calls for more senior executives to take responsibility.

Some institutional investors say the problems within NatWest Markets are actually a distraction from the real problem, which is the dramatic underperformance of NatWest's core retail banking operation.

One senior investor pointed out yesterday that if the retail bank had performed in line with the banking sector then the market value of NatWest since the appointment of Lord Alexander as chairman in 1989 would be pounds 12bn higher than its current figure. The "lost value" is pounds 8bn taken from the time Derek Wanless was appointed chief executive in 1992.

On the issue of contracts, the investor said: "Clearly it would be obscene if [Derek Wanless] were to get three years' money. If the business had performed well it would be different but it would be quite ridiculous in the current circumstances."

Although NatWest denies it is in play, the bank is widely understood to have held preliminary merger discussions with both Abbey National and the Prudential. Analysts say any deal would need to clear large regulatory hurdles but rumours of a takeover have seen the previously underperforming shares rise sharply in the past three months.

According to NatWest's most recent report and accounts, Mr Wanless was paid pounds 369,000 in basic salary before a pounds 225,000 bonus and other benefits took his total remuneration for the year to pounds 639,000. Any takeover which resulted in him losing his job would put him in line for a compensation package worth pounds 1.1m.

Other directors in line to benefit from the generous service terms include chief financial officer Richard Delbridge, Martin Gray, chief executive of NatWest UK, and Bernard Horn, chief executive of group operations.

Not included are two of the bank's highest paid managers, chairman Lord Alexander and former Foreign Secretary Douglas Hurd, who is deputy chairman of NatWest Markets and earned pounds 250,000 last year. Neither are executive directors and are employed on one year contracts.

NatWest's senior executives also sit on valuable share options, which would be triggered by a takeover bid.

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk