NatWest would move its headquarters from Edinburgh to London if Scotland voted for independence, its chief executive has said.
Alison Rose said an independent Scotland would be too small to support the banking group, formerly known as Royal Bank of Scotland, which has been based in the Scottish capital since it was founded 294 years ago.
Rose said the state-owned lender was “neutral” on the issue of Scottish independence because it was for the people to decide. However, she added: “In the event that there was independence for Scotland our balance sheet would be too big for an independent Scottish economy, and so we would move our registered headquarters, in the event of independence, to London.”
The banking group, known as Royal Bank of Scotland until last year, took a similar stance in 2014, when Scotland polled its residents on breaking away from the UK. The bank was then led by Rose’s predecessor, Ross McEwan.
“That doesn’t change anything in terms of our business mix, our customers and our colleagues”, Rose said. “We’re one of the largest private sector employees in Scotland, we support one in three businesses, one in five people, one in seven homebuyers – so it really is just the size of our balance sheet at that point.”
A spokesperson for NatWest said the decision would not affect customers and there were no current plans to move staff.
The announcement comes days before Scotland holds parliamentary elections on 6 May. The issue of independence is expected to be a determining factor in voting decisions.
Rose made the comments as NatWest Group nearly doubled profits in the first quarter, as it credited government support programmes for preventing a wave of customer loan defaults during the Covid crisis.
The chief executive, Alison Rose, said there were “reasons for optimism” thanks to the success of the UK’s vaccine rollout, and while it was too early to comment on the impact of the looser lockdown restrictions, she noted credit and debit card spending was rising towards “more normal levels”.
As a result, the bank defied analysts’ expectations by reducing the pile of cash reserved to cushion the blow of potential loan defaults, particularly among business borrowers, by about £102m.
Analysts had expected NatWest, which put aside £3.2bn to cover bad debts in 2020, to increase its reserves by £251m.
The release, alongside cost cuts and a jump in mortgage lending, helped lift pretax profits by 82% to £946m over the three months to March. That compares with £519m a year earlier, when profits were halved due to a larger-than-expected £800m Covid loan loss provision. The bank easily beat average City forecastsof £536m profits for the first quarter.
Rose said: “Defaults remain low as a result of the UK government support schemes and there are reasons for optimism with the vaccine programmes progressing at pace and restrictions being eased.”
While the banking boss warned of continued uncertainty for the UK economy and many of NatWest’s customers as a result of the ongoing crisis, she claimed NatWest was well capitalised to weather the rest of the pandemic and help customers “rebuild” in the wake of the outbreak.
NatWest shares were down 3.4% at 197p on Thursday afternoon.
The bank will not update its economic forecasts until July, suggesting a cautious view of looser lockdown restrictions and government plans to taper Covid support programmes, than some of its peers.
The bank – which is still 59.8% owned by the taxpayer after its government bailout during the financial crisis – said total income fell nearly 16% to £2.7bn in the first three months of the year. The drop was partly owing to a fall in customer spending and lower interest rates, following the Bank of England’s decision to slash rates to record lows of 0.1% at the start of the pandemic last year.
Consumers – particularly those who kept their jobs throughout the crisis – have broadly reduced spending during Covid lockdowns and saved their money instead. That trend led to a 17% rise in customer deposits at NatWest in the first quarter, which totalled £453bn at the end of March, compared with £385bn at the same time last year.
NatWest, which cut £72m worth of costs over the past year, said it would continue to keep its branch footprint under review, as customers adapt to banking online.
However, the state-owned lender warned it could face “substantial costs” to cover criminal proceedings brought by the UK regulator for allegedly failing to prevent money laundering.
The case is understood to relate to one of its corporate customers, a Bradford-based jeweller and gold dealer called Fowler Oldfield, which was raided by police in 2016 and subsequently closed. The firm was described as being the centre of a multimillion-pound money laundering business, according to crown court proceedings that followed.
NatWest representatives are expected to make their first appearance at the Westminster magistrates court on 26 May.