NatWest Denies Report It’s Eyeing $3.8 Billion Cost Reductions
National Westminster Bank Plc denied a report in the Sunday Times that it’s set to reduce costs by as much as 3 billion pounds ($3.8 billion) over the next five years.
According to the newspaper, the executive committee of the state-backed lender will on Monday be presented with a blueprint to reduce annual operating expenses to 4 billion pounds from 7 billion pounds.
“We do not have any plans of this type,” said a spokeswoman for NatWest, which last week changed its name from Royal Bank of Scotland Group Plc. The company in February set out a strategy to reduce costs this year by 250 million pounds, she said.
According to the Sunday Times, the bank’s plan involves using slicker technology, which could lead to job losses and branch closures after a drop in customer footfall since the coronavirus pandemic started.
Chief Executive Officer Alison Rose is eyeing cost cuts as record low U.K. interest rates of 0.1% and pressures caused by the pandemic deal a blow to banks’ profits. Analysts expect NatWest to set aside as much as 1.5 billion pounds for bad loans, which could tip the bank into the red in its second-quarter results on Friday, the Sunday Times said.
The cost-cutting plan is one of a broad range of longer-term options being explored by NatWest’s strategy team, led by Oliver Holbourn, who was in charge of managing taxpayers’ 62% stake before joining the bank in 2018, according to the report.
In March, the Treasury delayed its deadline for selling its stake in the bank until the end of March 2025 because of the coronavirus.
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