NatWest has cut its banker bonus pool to the lowest level since its financial crisis bailout, after swinging to a full-year loss in 2020.
The lender – formerly known as Royal Bank of Scotland – slumped to a loss of £351m for 2020 compared with a profit of £4.2bn a year earlier. The bank was stung by a surge in bad debt provisions, having put aside £3.2bn to cover a potential jump in defaults because of the coronavirus pandemic.
The loss ends three straight years of profit for the lender, which has struggled to stay out of the red since its £45bn bailout in 2008.
The bonus pool for NatWest bankers has been cut by 33% as a result, leaving staff to share £206m. It is the lowest total since it came into state ownership at the height of the financial crisis. A total of 803 employees earned more than £250,000 last year.
NatWest also confirmed on Friday that it was intending to pull out of the Republic of Ireland after 160 years, with plans to wind down and sell assets from its Ulster Bank operations after an “extensive” review.
Alison Rose, the NatWest chief executive, said: “It has become clear Ulster Bank will not be able to generate sustainable long terms returns for our shareholders. As a result, we are to begin a phased withdrawal from the Republic of Ireland over the coming years, which will be undertaken with careful consideration of the impact on customers and our colleagues.”
The NatWest chairman, Howard Davies, said the Irish government had not welcomed the news but had supported a potential sale of a €4bn (£3.5bn) loan book and some staff to the countries largest lender, Allied Irish Banks. It is also in early-stage discussions to sell assets to other potential buyers including Permanent TSB.
Ireland’s finance minister, Paschal Donohoe, said in a statement it was a “significant event” and “the Irish banking landscape will be poorer for the loss of Ulster Bank after all these years”.
NatWest, which is still 62% taxpayer-owned, paid Rose £2.6m for 2020. She gave up a quarter of her fixed pay last year, which was taken out of her annual share allowance, and waived her long-term bonus for 2020 – which will be reflected in her 2023 pay packet. Davies, who also donated part of his pay, confirmed there were no plans to extend their salary sacrifice this year.
The bank is restarting its dividend after the Bank of England lifted its temporary ban on shareholder distributions in December to allow limited payouts. NatWest’s rival Barclays has also resumed payouts.
NatWest plans to pay out £364m to shareholders, meaning £225m will go to the Treasury. The bank has also pledged to distribute at least £800m a year to shareholders until 2023.
Rose is planning to cut costs furtherby 4% a year, by bringing more of its customer processing online and reviewing its property footprint as the lender ramps up hybrid working arrangements in response to the pandemic. Rose did not rule out branch closures but said those decisions would be driven by customer use.
NatWest shares were up 4% at 178p on Friday.
The central bank’s dividend ban last year meant scrapping a £968m shareholder payout, including £600m worth of dividends to the Treasury. The move was designed to give banks a larger cushion to weather the economic downturn of the Covid crisis.