TIDM83NF
RNS Number : 6502Q
Natwest Markets PLC
29 October 2021
NatWest Markets Group
Q3 2021
Interim Management Statement
ci.natwest.com
NatWest Markets Group (NWM Group)
Results for Q3 2021
Growing a more sustainable business
We have supported customers in navigating challenging market
conditions and continued to deliver an integrated customer
proposition across NatWest Group. We have maintained a focus on
product innovation, investing in our people, and on growing our
expertise in areas that matter most to our customers. However, the
ongoing re-shaping of the Fixed Income business continued to impact
our results. Our strong performance in Climate and Sustainable
Funding and Financing has continued, and as at the end of Q3 we had
delivered GBP6.9 billion year to date (full year 2020: GBP7.2
billion), including GBP0.5 billion in Q3 2021 which will contribute
towards the new NatWest Group target of GBP100 billion between 1
July 2021 and the end of 2025.
Financial review
NWM Group reported a loss of GBP164 million for Q3 2021,
compared with a loss of GBP58 million in Q2 2021 and a profit of
GBP35 million in Q3 2020. Total income decreased to GBP92 million
in Q3 2021, reflecting continued weakness in Fixed Income which was
impacted by the re-shaping of the business. Operating expenses
increased to GBP297 million, largely due to the litigation and
conduct costs credit recognised in the prior quarter which
reflected progress in closing legacy matters.
Financial performance
-- Total income was GBP92 million in Q3 2021, compared with GBP108 million
in Q2 2021 and GBP275 million in Q3 2020. Income excluding asset disposals/strategic
risk reduction and own credit adjustments decreased to GBP102 million
in Q3 2021, from GBP145 million in Q2 2021 and GBP321 million in Q3
2020, driven by continued weakness in Fixed Income which was impacted
by the re-shaping of the business.
-- Operating expenses of GBP297 million in Q3 2021 were up GBP89 million
from GBP208 million in Q2 2021, largely due to the litigation and
conduct costs credit recognised in the prior quarter which reflected
progress in closing legacy matters, and up GBP33 million from GBP264
million in Q3 2020, largely due to higher strategic costs and litigation
and conduct costs in the current quarter. Operating expenses for the
nine months ended 30 September 2021, excluding strategic costs and
litigation and conduct costs, of GBP669 million were down GBP138 million
compared with the prior year, primarily reflecting ongoing progress
on underlying cost reductions.
-- NWM Group's total assets and liabilities decreased by GBP60.4 billion
and GBP59.1 billion to GBP212.7 billion and GBP204.7 billion respectively
at 30 September 2021, compared with 31 December 2020. The decreases
primarily reflect lower derivative fair values, largely driven by
increases in interest rates across major currencies.
-- On 28 October 2021, the NWM Plc Board approved an interim dividend
of GBP250 million, to be declared and payable to NatWest Group plc
on 29 October 2021. There has been no adjustment to the Q3 2021 condensed
consolidated financial statements, however a GBP250 million foreseeable
dividend deduction has been applied to the Q3 2021 regulatory capital
position.
Capital and leverage
-- Total NWM Plc RWAs were GBP23.4 billion at 30 September 2021, compared
with GBP24.6 billion at 30 June 2021 and GBP25.6 billion at 31 December
2020. Following the announcement of GBP LIBOR cessation in March 2021,
market risk RWAs had become elevated by GBP2.5 billion at 30 June
2021 as a result of including modelled GBP LIBOR basis risk post 4
January 2022. Regulatory approval was obtained in July 2021 to update
the VAR model which removed this impact in Q3 2021, contributing to
the decrease compared to 30 June 2021. The decrease in market risk
RWAs for the quarter was partially offset by an increase in credit
risk RWAs, driven by new syndication deals. The year-to-date decrease
in RWAs reflects lower levels of counterparty credit, market and operational
risk.
-- NWM Plc's Common Equity Tier 1 (CET1) ratio was 19.4% at 30 September
2021, compared with 20.2% at 30 June 2021 and 21.7% at 31 December
2020. The decrease in the year reflected the impact of dividends paid
to NatWest Group plc and other reserve movements, partially offset
by the reduction in RWAs.
-- Total MREL for NWM Plc at 30 September 2021 was GBP10.2 billion, or
43.5% of RWAs, down from GBP12.7 billion or 49.6% of RWAs at 31 December
2020. The reduction in the year was largely due to the redemption
of a $1.5 billion internal instrument issued to NatWest Group plc
and the reduction in CET1 capital.
Liquidity and funding
-- NWM Plc's liquidity portfolio at 30 September 2021 was GBP16.2 billion
with an LCR of 241% (31 December 2020 - GBP19.4 billion with LCR 268%).
-- NWM Plc issued GBP3.4 billion of term senior unsecured debt securities
in the nine months ended 30 September 2021, including two benchmark
transactions under the US MTN programme amounting to $2.55 billion
of notes, a benchmark transaction under the EMTN programme of EUR1.25
billion of notes, and other private placements.
Outlook (1)
We retain the outlook guidance provided in the 2021 Interim
Results document except we no longer expect to achieve the majority
of the remaining RWA reduction towards the medium term target this
year.
(1) The targets, expectations and trends discussed in this
section represent management's current expectations and are subject
to change, including as a result of the factors described in the
Risk Factors section on pages 156 to 172 of the NatWest Markets Plc
2020 Annual Report and Accounts, and the Summary Risk Factors set
out on pages 48 and 49 of the NatWest Markets Plc 2021 Interim
Results. These statements constitute forward-looking statements.
Refer to Forward-looking statements in this announcement.
Financial review
The segmental analysis of key income statement lines for the
nine months ended 30 September 2021 is set out below. Commentary
refers to the tables below as well as the consolidated income
statement shown on page 7.
Nine months ended
30 September 2021 30 September 2020
Central Central
NatWest items NatWest items
& &
Markets other Total Markets other Total
Income statement GBPm GBPm GBPm GBPm GBPm GBPm
------- ------- ----- ------- ------- -------
Net interest income (5) - (5) (59) 2 (57)
Non-interest income 390 3 393 1,104 37 1,141
--------------------------------- ------- ------- ------- -------
Total income 385 3 388 1,045 39 1,084
----- -------
Strategic costs (141) (8) (149) (164) 20 (144)
Litigation and conduct costs - 41 41 (4) (123) (127)
Other operating expenses (669) - (669) (834) 27 (807)
--------------------------------- ------- ------- ------- -------
Operating expenses (810) 33 (777) (1,002) (76) (1,078)
----- -------
Operating (loss)/profit before
impairments (425) 36 (389) 43 (37) 6
Impairment releases/(losses) 19 - 19 (38) (4) (42)
--------------------------------- ------- ------- ------- -------
Operating (loss)/profit before
tax (406) 36 (370) 5 (41) (36)
Tax credit/(charge) 87 (58)
--------------------------------- ------- ------- ----- ------- ------- -------
Loss for the period (283) (94)
--------------------------------- ------- ------- ----- ------- ------- -------
Income
--------------------------------- ------- ------- ------- -------
Fixed Income (1,2,3,4) 5 - 5 528 - 528
Currencies (1,3) 306 - 306 462 - 462
Capital Markets (1,2,3) 256 - 256 294 - 294
Capital Management Unit & other
(1,4,5) 20 3 23 (43) 39 (4)
--------------------------------- ------- ------- ----- ------- ------- -------
Income excluding Revenue share,
Asset disposals and OCA 587 3 590 1,241 39 1,280
Revenue share paid to other
NatWest Group segments (153) - (153) (140) - (140)
--------------------------------- ------- ------- ----- ------- ------- -------
Income excluding Asset disposals
and OCA 434 3 437 1,101 39 1,140
Asset disposals/Strategic risk
reduction (6) (52) - (52) (75) - (75)
Own credit adjustments (OCA) 3 - 3 19 - 19
--------------------------------- ------- ------- ------- -------
Total income 385 3 388 1,045 39 1,084
--------------------------------- ------- ------- ----- ------- ------- -------
(1) Income of GBP(42) million, GBP(8) million and GBP(14)
million reported within Fixed Income, Currencies and Capital
Markets respectively at 30 September 2020 relates to business that
was subsequently transferred to Capital Management Unit during
2020.
(2) Income of GBP33 million reported within Capital Markets at
30 September 2020 relates to business that was subsequently
transferred to Fixed Income during 2020.
(3) Income of GBP59 million and GBP8 million reported within
Fixed Income at 30 September 2020 relates to business that was
subsequently transferred to Currencies and Capital Markets
respectively during 2020.
(4) Fixed Income includes income of GBP(7) million (30 September 2020: GBP48 million) relating to miscellaneous balances that from Q2 2021 have been included in Capital Management Unit & other.
(5) Capital Management Unit was set up in Q3 2020 to manage the
capital usage and optimisation across all parts of NatWest Markets.
The income shown here relates to legacy assets and other
miscellaneous balances. Other relates to income booked to the
Central items & other operating segment.
(6) Asset disposals/Strategic risk reduction relates to the
costs of exiting positions, which includes changes in carrying
value to align to the expected exit valuation, and the impact of
risk reduction transactions entered into, in respect of the
strategic announcements of 14 February 2020.
-- Net interest income of GBP5 million net interest expense for the nine
months ended 30 September 2021 decreased by GBP52 million compared
with GBP57 million net interest expense in the comparative period,
reflecting reduced funding costs for the business driven by the ongoing
repayment of legacy debt during the period.
-- Non-interest income of GBP393 million decreased by GBP748 million
compared with GBP1,141 million in the nine months ended 30 September
2020, reflecting increased customer activity in the comparative period
in response to the COVID-19 pandemic, in addition to weaker performance
in Fixed Income which was impacted by the re-shaping of the business.
-- Operating expenses were GBP777 million for the nine months ended 30
September 2021, a decrease of GBP301 million compared with GBP1,078
million in the comparative period. Litigation and conduct costs of
GBP41 million credit reflects continued progress in closing legacy
matters during the period and were GBP168 million lower than GBP127
million in the nine months ended 30 September 2020. Strategic costs
were GBP149 million for the period, compared with GBP144 million in
the nine months ended 30 September 2020, as work continued on the
refocusing of NWM Group. Other operating expenses decreased to GBP669
million from GBP807 million in the comparative period, primarily reflecting
ongoing progress on underlying cost reductions.
-- Impairment releases were GBP19 million for the nine months ended 30
September 2021, largely driven by credit improvements in the period
and releases on individual IFRS 9 Stage 2 and Stage 3 exposures, compared
with a charge of GBP42 million in the comparative period when ECL
provisions increased at the onset of the COVID-19 pandemic.
-- NatWest Markets operating loss before tax was GBP406 million compared
with a profit of GBP5 million for the nine months ended 30 September
2020. Income excluding asset disposals and own credit adjustments
of GBP434 million was GBP667 million lower than in the comparative
period, reflecting increased customer activity in the comparative
period as the market reacted to COVID-19, in addition to weaker performance
in Fixed Income which was impacted by the re-shaping of the business.
Operating expenses of GBP810 million were GBP192 million lower compared
with GBP1,002 million in the nine months ended 30 September 2020,
largely driven by a decrease in other operating expenses reflecting
continued progress on underlying cost reductions.
-- Central items & other operating profit before tax was GBP36 million,
compared with a GBP41 million operating loss for the nine months ended
30 September 2020. Litigation and conduct costs of GBP41 million credit
in the current period reflects continued progress in closing legacy
matters, and were GBP164 million lower than in the nine months ended
30 September 2020.
Financial review
The segmental analysis of key income statement lines for the
quarter ended 30 September 2021 is set out below. Commentary refers
to the tables below as well as the consolidated income statement
shown on page 7.
Q3 2021 Q2 2021 Q3 2020
----------------------- ----------------------- -----------------------
Central Central Central
NatWest items NatWest items NatWest items
& & &
Markets other Total Markets other Total Markets other Total
Income statement GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Net interest income (1) - (1) 3 - 3 (20) 2 (18)
Non-interest income 96 (3) 93 99 6 105 256 37 293
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Total income 95 (3) 92 102 6 108 236 39 275
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Strategic costs (52) (2) (54) (59) (4) (63) (59) 27 (32)
Litigation and conduct costs (2) (25) (27) 2 79 81 (2) (12) (14)
Other operating expenses (214) (2) (216) (226) - (226) (224) 6 (218)
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Operating expenses (268) (29) (297) (283) 75 (208) (285) 21 (264)
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Operating (loss)/profit before
impairments (173) (32) (205) (181) 81 (100) (49) 60 11
Impairment releases 3 - 3 10 - 10 2 1 3
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Operating (loss)/profit before
tax (170) (32) (202) (171) 81 (90) (47) 61 14
Tax credit 38 32 21
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
(Loss)/profit for the period (164) (58) 35
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Income
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Fixed Income (1,2,3) (38) - (38) 5 - 5 125 - 125
Currencies (2) 101 - 101 87 - 87 126 - 126
Capital Markets (2) 90 - 90 92 - 92 75 - 75
Capital Management Unit &
other (1,3,4) 7 (3) 4 5 6 11 1 39 40
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Income excluding Revenue share,
Asset disposals and OCA 160 (3) 157 189 6 195 327 39 366
Revenue share paid to other
NatWest Group segments (55) - (55) (50) - (50) (45) - (45)
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
Income excluding Asset disposals
and OCA 105 (3) 102 139 6 145 282 39 321
Asset disposals/Strategic
risk reduction (5) (12) - (12) (36) - (36) (12) - (12)
Own credit adjustments (OCA) 2 - 2 (1) - (1) (34) - (34)
--------------------------------- ------- ------- -----
Total income 95 (3) 92 102 6 108 236 39 275
--------------------------------- ------- ------- ----- ------- ------- ----- ------- ------- -----
(1) Income of GBP(2) million reported within Fixed Income at Q3
2020 relates to business that was subsequently transferred to
Capital Management Unit during 2020.
(2) Income of GBP12 million and GBP3 million reported within
Fixed Income at Q3 2020 relates to business that was subsequently
transferred to Currencies and Capital Markets respectively during
2020.
(3) Fixed Income for Q3 2020 includes income of GBP39 million
relating to miscellaneous balances that from Q2 2021 have been
included in Capital Management Unit & other.
(4) Capital Management Unit was set up in Q3 2020 to manage
capital usage and optimisation across all parts of NatWest Markets.
The income shown here relates to legacy assets and other
miscellaneous balances. Other relates to income booked to the
Central items & other operating segment.
(5) Asset disposals/Strategic risk reduction relates to the
costs of exiting positions, which includes changes in carrying
value to align to the expected exit valuation, and the impact of
risk reduction transactions entered into, in respect of the
strategic announcements of 14 February 2020.
-- Net interest income was a net expense of GBP1 million in Q3 2021 compared
with net income of GBP3 million in Q2 2021 and net expense of GBP18
million in Q3 2020.
-- Non-interest income of GBP93 million decreased by GBP12 million compared
with GBP105 million in Q2 2021, reflecting continued weak performance
in Fixed Income which was impacted by the re-shaping of the business,
and by GBP200 million compared with GBP293 million in Q3 2020.
-- Operating expenses were GBP297 million in Q3 2021, compared with GBP208
million in Q2 2021 and GBP264 million in Q3 2020. Strategic costs were
GBP54 million in Q3 2021, compared with GBP63 million in Q2 2021 and
GBP32 million in Q3 2020, as work continued on the refocusing of NWM
Group. Litigation and conduct costs were GBP27 million in Q3 2021,
up GBP108 million from the GBP81 million credit recognised in Q2 2021
which reflected continued progress in closing legacy matters, and up
GBP13 million from GBP14 million in Q3 2020. Other operating expenses
reduced to GBP216 million in Q3 2021 from GBP226 million in Q2 2021
and GBP218 million in Q3 2020, reflecting ongoing progress on underlying
cost reductions.
-- NatWest Markets operating loss before tax was GBP170 million in Q3
2021, compared with GBP171 million in Q2 2021 and GBP47 million in
Q3 2020. Income excluding asset disposals and own credit adjustments
of GBP105 million was down compared with GBP139 million in Q2 2021
and GBP282 million in Q3 2020, reflecting continued weak performance
in Fixed Income which was impacted by the re-shaping of the business.
Operating expenses of GBP268 million in Q3 2021 were lower than GBP283
million in Q2 2021 and GBP285 million in Q3 2020, largely due to lower
other operating expenses, reflecting ongoing progress on underlying
cost reductions.
-- Central items & other operating loss before tax was GBP32 million,
compared with a profit of GBP81 million in Q2 2021 which was largely
driven by litigation and conduct costs credit reflecting ongoing progress
in closing legacy matters, and a profit of GBP61 million in Q3 2020
which included income relating to the transfer of a service subsidiary
to NatWest Holdings Limited and various expense credits.
Financial review
Balance sheet profile as at 30 September 2021
NWM Group's balance sheet profile is summarised below.
Commentary refers to the table below as well as the consolidated
balance sheet on page 8.
Assets Liabilities
------------------------------------------------------ ------------------------------------------------------
30 September 31 December 30 September 31 December
2021 2020 2021 2020
GBPbn GBPbn GBPbn GBPbn
--------------------------- ------------ ----------- ------------ ----------- ---------------------------
Cash and balances
at central banks 15.7 15.8
Securities 29.9 29.2 29.1 26.8 Short positions
Reverse repos (1) 23.1 19.4 21.5 19.0 Repos (2)
Derivative cash collateral Derivative cash collateral
given (3) 12.1 18.5 17.6 23.2 received (4)
Other trading assets 1.2 1.6 2.5 3.3 Other trading liabilities
--------------------------- ------------ ----------- ------------ ----------- ---------------------------
Total trading assets 66.3 68.7 70.7 72.3 Total trading liabilities
Loans - amortised Deposits - amortised
cost 9.0 9.4 4.4 4.4 cost
Settlement balances 8.1 2.3 7.8 2.2 Settlement balances
Amounts due from Amounts due to holding
holding company company
and fellow subsidiaries 1.6 1.6 6.1 8.1 and fellow subsidiaries
Other financial assets 8.2 9.0 18.0 18.2 Other financial liabilities
Other assets 0.8 0.7 1.0 1.3 Other liabilities
Liabilities excluding
Funded assets 109.7 107.5 108.0 106.5 derivatives
Derivative assets 103.0 165.6 96.7 157.3 Derivative liabilities
--------------------------- ------------ ----------- ------------ ----------- ---------------------------
Total assets 212.7 273.1 204.7 263.8 Total liabilities
of which:
20.1 20.6 wholesale funding (5)
short-term wholesale
9.1 9.5 funding (5)
--------------------------- ------------ ----------- ------------ ----------- ---------------------------
(1) Comprises bank reverse repos of GBP3.7 billion (31 December 2020
- GBP2.2 billion) and customer reverse repos of GBP19.4 billion
(31 December 2020 - GBP17.2 billion).
(2) Comprises bank repos of GBP1.5 billion (31 December 2020 - GBP1.0
billion) and customer repos of GBP20.0 billion (31 December 2020
- GBP18.0 billion).
(3) Comprises derivative cash collateral given relating to banks of
GBP4.8 billion (31 December 2020 - GBP7.5 billion) and customers
of GBP7.3 billion (31 December 2020 - GBP11.0 billion).
(4) Comprises derivative cash collateral received relating to banks
of GBP8.1 billion (31 December 2020 - GBP11.8 billion) and customers
of GBP9.5 billion (31 December 2020 - GBP11.4 billion).
(5) Predominantly comprises bank deposits (excluding repos), debt securities
in issue and third party subordinated liabilities.
-- Total assets and liabilities decreased by GBP60.4 billion and GBP59.1
billion to GBP212.7 billion and GBP204.7 billion respectively at 30
September 2021, compared with GBP273.1 billion and GBP263.8 billion
at 31 December 2020. The decreases primarily reflect lower derivative
fair values, largely driven by increases in interest rates across
major currencies. Funded assets, which exclude derivatives, increased
by GBP2.2 billion to GBP109.7 billion.
-- Trading assets were down by GBP2.4 billion to GBP66.3 billion at 30
September 2021, with a decrease in derivative cash collateral posted
partially offset by increases in securities and reverse repos driven
by customer flows and the management of balance sheet within limits.
Trading liabilities decreased by GBP1.6 billion to GBP70.7 billion,
with a decrease in derivative cash collateral received partially offset
by increases in short positions and repos.
-- Derivative assets and derivative liabilities were down GBP62.6 billion
to GBP103.0 billion and GBP60.6 billion to GBP96.7 billion respectively
at 30 September 2021, largely driven by increases in interest rates
across major currencies since year end 2020.
-- Settlement balance assets and liabilities were up GBP5.8 billion and
GBP5.6 billion to GBP8.1 billion and GBP7.8 billion respectively,
due to increased trading compared with the seasonally lower levels
of customer activity leading up to 31 December 2020 .
-- Loans to customers - amortised cost were down GBP1.3 billion to GBP7.1
billion, largely reflecting liquidity management actions.
-- Other financial liabilities decreased by GBP0.2 billion to GBP18.0
billion ( 31 December 2020 - GBP18.2 billion), as new issuance was
offset by maturities in the period. The balance at 30 September 2021
includes GBP11.7 billion of medium-term notes issued.
-- Owners' equity was down GBP1.4 billion to GBP8.0 billion ( 31 December
2020 - GBP9.4 billion), driven by interim dividend payments to NatWest
Group plc totalling GBP0.8 billion, and other reserve movements in
the period.
Capital, liquidity and funding risk
Capital, RWAs and leverage
Capital resources, RWAs and leverage based on the PRA
transitional arrangements for NWM Plc are set out below.
Regulatory
capital is monitored and reported at legal entity level for
large subsidiaries of NatWest Group.
30 September 30 June 31 December
2021 2021 2020
Capital adequacy ratios % % %
----------------------------- ------------ ------- -----------
CET1 19.4 20.2 21.7
Tier 1 22.3 23.9 25.2
Total 27.6 28.9 30.3
Total MREL 43.5 43.8 49.6
----------------------------- ------------ ------- -----------
Capital (1) GBPm GBPm GBPm
----------------------------- ------------ ------- -----------
CET1 (2) 4,553 4,969 5,547
Tier 1 5,231 5,864 6,433
Total 6,463 7,100 7,753
Total MREL (3) 10,191 10,771 12,679
----------------------------- ------------ ------- -----------
Risk-weighted assets
----------------------------- ------------ ------- -----------
Credit risk 7,111 5,941 6,902
Counterparty credit risk 7,395 7,424 8,130
Market risk 6,919 9,197 8,150
Operational risk 2,020 2,020 2,382
----------------------------- ------------ ------- -----------
Total RWAs 23,445 24,582 25,564
----------------------------- ------------ ------- -----------
Leverage (4)
----------------------------- ------------ ------- -----------
CRR leverage exposure (GBPm) 122,124 124,600 123,927
Tier 1 capital (GBPm) 5,231 5,864 6,433
CRR leverage ratio (%) 4.3 4.7 5.2
----------------------------- ------------ ------- -----------
Liquidity and funding
30 September 30 June 31 December
2021 2021 2020
------------------------------------- ------------ ------- -----------
Liquidity coverage ratio (LCR) (%) 241 227 268
Liquidity portfolio (GBPbn) 16.2 17.7 19.4
Total wholesale funding (GBPbn) (5) 20.1 20.7 20.6
Total funding including repo (GBPbn) 70.0 71.6 75.9
------------------------------------- ------------ ------- -----------
(1) CRR end-point for UK banks set by the PRA is 10.5% minimum
total capital ratio, with a minimum CET1 ratio of 7.0%.
(2) CET1 includes GBP250 million foreseeable ordinary dividend deduction.
(3) Includes senior internal debt instruments issued to NatWest
Group plc with a regulatory value of GBP3.8 billion (30 June 2021 -
GBP3.7 billion, 31 December 2020 - GBP4.9 billion).
(4) Leverage exposure is broadly aligned to the accounting value
of on and off-balance sheet exposures albeit subject to specific
adjustments for derivatives, securities financing positions and
off-balance sheet exposures.
(5) Predominantly comprises bank deposits (excluding repos),
debt securities in issue and third party subordinated
liabilities.
Condensed consolidated income statement for the period ended 30 September 2021 (unaudited)
Nine months ended Quarter ended
30 September 30 September 30 September 30 June 30 September
2021 2020 2021 2021 2020
GBPm GBPm GBPm GBPm GBPm
Interest receivable 258 428 79 81 152
Interest payable (263) (485) (80) (78) (170)
-------------------------------- ------------ ------------ ------------ ------- ------------
Net interest income (5) (57) (1) 3 (18)
-------------------------------- ------------ ------------ ------------ ------- ------------
Fees and commissions receivable 194 411 48 69 134
Fees and commissions payable (81) (348) (19) (26) (146)
Income from trading activities 300 1,026 74 53 250
Other operating income (20) 52 (10) 9 55
Non-interest income 393 1,141 93 105 293
-------------------------------- ------------ ------------ ------------ ------- ------------
Total income 388 1,084 92 108 275
-------------------------------- ------------ ------------ ------------ ------- ------------
Staff costs (370) (519) (118) (118) (142)
Premises and equipment (59) (88) (22) (18) (13)
Other administrative expenses (333) (454) (152) (67) (106)
Depreciation and amortisation (15) (17) (5) (5) (3)
Operating expenses (777) (1,078) (297) (208) (264)
-------------------------------- ------------ ------------ ------------ ------- ------------
(Loss)/profit before impairment
releases/(losses) (389) 6 (205) (100) 11
Impairment releases/(losses) 19 (42) 3 10 3
-------------------------------- ------------ ------------ ------------ ------- ------------
Operating (loss)/profit before
tax (370) (36) (202) (90) 14
Tax credit/(charge) 87 (58) 38 32 21
--------------------------------
(Loss)/profit for the period (283) (94) (164) (58) 35
-------------------------------- ------------ ------------ ------------ ------- ------------
Attributable to:
Ordinary shareholders (369) (79) (180) (112) 17
Paid-in equity holders 47 51 16 15 17
Non-controlling interests 39 (66) - 39 1
(283) (94) (164) (58) 35
-------------------------------- ------------ ------------ ------------ ------- ------------
Condensed consolidated statement of comprehensive income for the
period ended 30 September 2021 (unaudited)
Nine months ended Quarter ended
30 September 30 September 30 September 30 June 30 September
2021 2020 2021 2021 2020
GBPm GBPm GBPm GBPm GBPm
------------ ------------ ------------ ------- ------------
(Loss)/profit for the period (283) (94) (164) (58) 35
------------------------------------------- ------------ ------------ ------------ ------- ------------
Items that do not qualify for
reclassification
Remeasurement of retirement
benefit schemes - (3) 1 - -
Changes in fair value of credit
in financial liabilities
------------ ------------
designated at fair value through
profit or loss (FVTPL)
------------ ------------
due to own credit risk (29) 20 (4) (18) (63)
------------ ------------
Fair value through other comprehensive
income (FVOCI)
------------ ------------
financial assets (2) (152) (1) (4) 24
------------ ------------
Tax 5 17 1 5 14
(26) (118) (3) (17) (25)
------------------------------------------- ------------ ------------ ------------ ------- ------------
Items that do qualify for reclassification
FVOCI financial assets (3) (7) 5 (8) 11
------------ ------------
Cash flow hedges (157) 132 (54) (13) (22)
------------ ------------
Currency translation (93) 174 19 26 (84)
------------ ------------
Tax 21 (38) 14 (16) 4
(232) 261 (16) (11) (91)
------------------------------------------- ------------ ------------ ------------ ------- ------------
Other comprehensive (loss)/income
after tax (258) 143 (19) (28) (116)
Total comprehensive (loss)/income
for the period (541) 49 (183) (86) (81)
------------------------------------------- ------------ ------------ ------------ ------- ------------
Attributable to:
------------ ------------
Ordinary shareholders (631) 49 (199) (144) (100)
------------ ------------
Paid-in equity holders 47 51 16 15 17
------------ ------------
Non-controlling interests 43 (51) - 43 2
(541) 49 (183) (86) (81)
------------------------------------------- ------------ ------------ ------------ ------- ------------
Condensed consolidated balance sheet as at 30 September 2021
(unaudited)
30 September 31 December
2021 2020
GBPm GBPm
Assets
------------
Cash and balances at central banks 15,743 15,771
------------
Trading assets 66,299 68,689
Derivatives 103,026 165,619
------------
Settlement balances 8,138 2,296
------------
Loans to banks - amortised cost 1,877 1,003
------------
Loans to customers - amortised cost 7,074 8,444
------------
Amounts due from holding company and fellow subsidiaries 1,585 1,587
------------
Other financial assets 8,150 9,041
------------
Other assets 769 688
--------------------------------------------------------- ------------ -----------
Total assets 212,661 273,138
Liabilities
------------
Bank deposits 2,156 1,808
------------
Customer deposits 2,214 2,618
Amounts due to holding company and fellow subsidiaries 6,120 8,134
------------
Settlement balances 7,792 2,248
Trading liabilities 70,696 72,252
------------
Derivatives 96,651 157,332
Other financial liabilities 18,042 18,170
Other liabilities 1,042 1,234
--------------------------------------------------------- ------------ -----------
Total liabilities 204,713 263,796
Equity
--------------------------------------------------------- ------------ -----------
Owners' equity 7,951 9,388
Non-controlling interests (3) (46)
Total equity 7,948 9,342
--------------------------------------------------------- ------------ -----------
Total liabilities and equity 212,661 273,138
--------------------------------------------------------- ------------ -----------
Condensed consolidated statement of changes in equity for the
period ended 30 September 2021 (unaudited)
Share
capital Total Non
and
share Paid-in Retained Other owners' controlling Total
premium equity earnings reserves* equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2021 2,159 904 5,969 356 9,388 (46) 9,342
------- ------- -------- --------- ------- ----------- ------
(Loss)/profit attributable
to ordinary
------- -------- --------- ------- ----------- ------
shareholders and paid-in
equity holders - - (322) - (322) 39 (283)
------- -------- --------- ------- ----------- ------
Other comprehensive income
------- -------- --------- ------- ----------- ------
- Changes in fair value
of credit in financial
------- -------- --------- ------- ----------- ------
liabilities designated
at FVTPL due
------- -------- --------- ------- ----------- ------
to own credit risk - - (29) - (29) - (29)
------- -------- --------- ------- ----------- ------
- Unrealised (losses)/gains:
FVOCI and
------- -------- --------- ------- ----------- ------
equity shares - - - (6) (6) 4 (2)
------- -------- --------- ------- ----------- ------
- Unrealised losses:
cash flow hedges - - - (162) (162) - (162)
------- -------- --------- ------- ----------- ------
- Foreign exchange reserve
movement - - - (97) (97) - (97)
------- -------- --------- ------- ----------- ------
- Amounts transferred
from equity to
------- -------- --------- ------- ----------- ------
earnings - - - 6 6 - 6
------- -------- --------- ------- ----------- ------
- Tax - - 5 21 26 - 26
------- -------- --------- ------- ----------- ------
Ordinary share dividends
paid - - (750) - (750) - (750)
------- -------- --------- ------- ----------- ------
Preference share and paid-in
equity
------- -------- --------- ------- ----------- ------
dividends paid - - (47) - (47) (47)
------- -------- --------- ------- ----------- ------
Redemption of preference
shares 187 - (188) - (1) - (1)
------- -------- --------- ------- ----------- ------
Share-based payments - - (55) - (55) - (55)
------------------------------- ------- ------- -------- --------- ------- ----------- ------
At 30 September 2021 2,346 904 4,583 118 7,951 (3) 7,948
30 September
2021
Attributable to: GBPm
------------------------------------------------- -------- --------- ------- ----------- ------
Ordinary shareholders 7,047
Paid-in equity holders 904
Non-controlling interests (3)
------------------------------- ------- ------- ------
7,948
------
*Other reserves consist of:
FVOCI reserve 29
------
Cash flow hedging reserve 71
Foreign exchange reserve 18
------------------------------- ------- ------- -------- --------- ------- ----------- ------
118
------
Notes
1. Basis of preparation
The condensed consolidated financial statements should be read
in conjunction with NatWest Markets Plc 2020 Annual Report and
Accounts which were prepared in accordance with International
Accounting Standards in conformity with the requirements of the
Companies Act 2006.
Going concern
Having reviewed NWM Group's forecasts, projections, the
potential impact of COVID-19 and other relevant evidence, the
directors have a reasonable expectation that NWM Group will
continue in operational existence for a period of not less than
twelve months. Accordingly, the results for the period ended 30
September 2021 have been prepared on a going concern basis.
2. Accounting policies
NWM Group's principal accounting policies are as set out on
pages 93 to 97 of the NatWest Markets Plc 2020 Annual Report and
Accounts. Changes to accounting policies from 1 January 2021 had no
material effect on NatWest Markets
Plc accounts.
Critical accounting policies and key sources of estimation
uncertainty
The judgements and assumptions that are considered to be the
most important to the portrayal of NWM Group's financial condition
are those relating to deferred tax, fair value of financial
instruments, loan impairment provisions and provisions for
liabilities and charges. These critical accounting policies and
judgements are referenced on pages 96 and 97 of the NatWest Markets
Plc 2020 Annual Report and Accounts. Estimation uncertainty has
been affected by the COVID-19 pandemic. Management's consideration
of this source of uncertainty is outlined in the relevant sections
of NatWest Markets Plc 2020 Annual Report and Accounts, including
the ECL estimate for the period in the Risk and capital management
section contained in the NatWest Markets Plc 2020 Annual Report and
Accounts.
It was announced in the UK Government's Budget on 27 October
2021 that the UK banking surcharge will decrease from 8% to 3% from
1 April 2023. This change is expected to be enacted in 2022. The
resulting change to the net deferred tax liability position in
NatWest Markets is not expected to be material.
Information used for significant estimates
The COVID-19 pandemic has continued to cause significant
economic and social disruption. Key financial estimates are
based
on a range of anticipated future economic conditions described
by internally developed scenarios. Measurement of valuation
reserves and expected credit losses are highly sensitive to
reasonably possible changes in those anticipated conditions. Other
reasonably possible assumptions about the future include a
prolonged financial effect of the COVID-19 pandemic on the economy
of the UK and other countries. Changes in judgements and
assumptions could result in a material adjustment to those
estimates in the next reporting periods, refer to the NatWest
Markets Plc Risk factors in the 2020 Annual Report and
Accounts.
Notes
3. Trading assets and liabilities
Trading assets and liabilities comprise assets and liabilities
held at fair value in trading portfolios.
30 September 31 December
2021 2020
Assets GBPm GBPm
------------ -----------
Loans
- Reverse repos 23,070 19,404
- Collateral given 12,053 18,459
- Other loans 1,248 1,611
--------------------------------------- ------------ -----------
Total loans 36,371 39,474
--------------------------------------- ------------ -----------
Securities
Central and local government
- UK 5,135 4,184
- US 2,544 5,149
- Other 18,244 16,436
Financial institutions and Corporate 4,005 3,446
Total securities 29,928 29,215
--------------------------------------- ------------ -----------
Total 66,299 68,689
Liabilities
--------------------------------------- ------------ -----------
Deposits
- Repos 21,538 19,036
- Collateral received 17,582 23,226
- Other deposits 1,493 1,803
Total deposits 40,613 44,065
--------------------------------------- ------------ -----------
Debt securities in issue 1,007 1,408
Short positions 29,076 26,779
Total 70,696 72,252
--------------------------------------- ------------ -----------
4. Other financial liabilities
30 September 31 December
2021 2020
GBPm GBPm
Customer deposits - designated as at fair value through
profit or loss 728 796
Debt securities in issue
- designated as at fair value through profit or loss 1,056 1,607
- amortised cost 15,197 14,662
Subordinated liabilities
- designated as at fair value through profit or loss 747 793
- amortised cost 314 312
-------------------------------------------------------- ------------ -----------
Total 18,042 18,170
-------------------------------------------------------- ------------ -----------
Notes
5. Amounts due to holding company and fellow subsidiaries
30 September 31 December
2021 2020
Liabilities GBPm GBPm
Bank deposits - amortised cost 129 145
Customer deposits - amortised cost 79 144
Trading liabilities 387 636
Other financial liabilities - subordinated liabilities 1,476 1,753
MREL instruments issued to NatWest Group plc 3,890 5,181
Other liabilities 159 275
------------------------------------------------------- ------------ -----------
Total 6,120 8,134
------------------------------------------------------- ------------ -----------
6. Litigation and regulatory matters
NatWest Markets Plc's Interim Results 2021, issued on 30 July
2021, included disclosures about NWM Group's litigation and
regulatory matters in Note 12. Set out below are the material
developments in those matters since publication of the Interim
Results 2021.
Litigation
Residential mortgage-backed securities (RMBS) litigation in the
US
The State of New Mexico, on behalf of certain state agencies,
has been pursuing claims in New Mexico state court against NatWest
Markets Securities Inc. (NWMSI) concerning certain historical RMBS
offerings that allegedly involved materially false or misleading
statements and/or omissions regarding the underwriting standards
pursuant to which the mortgage loans underlying the RMBS were
issued. NWMSI has reached an agreement in principle to settle this
matter for an amount that is covered by an existing provision.
London Interbank Offered Rate (LIBOR) and other rates
litigation
On 30 September 2021, the United States District Court for the
Southern District of New York dismissed all claims against NWM Plc
and other NatWest Group companies in the class action alleging that
manipulation of JPY LIBOR and Euroyen TIBOR impacted the price of
derivatives allegedly tied to those rates, finding a lack of
antitrust standing and personal jurisdiction. The dismissal may be
the subject of a future appeal.
Madoff
NatWest Markets N.V. (NWM N.V.) is a defendant in two actions
filed by the trustee for the bankruptcy estates of Bernard L.
Madoff and Bernard L. Madoff Investment Securities LLC, in
bankruptcy court in New York, which together seek to clawback more
than US$298 million in redemptions that NWM N.V. allegedly received
from certain Madoff feeder funds and certain swap counterparties.
In these and similar cases pending against other defendants, the
bankruptcy court previously held that, in order to proceed to
discovery and pursue its claims, the trustee had to allege that a
defendant lacked "good faith" when it received the funds in
question. In August 2021, the United States Court of Appeals for
the Second Circuit, in similar cases against other defendants,
reversed the bankruptcy court's ruling on this question, holding
instead that if a defendant wishes to rely on "good faith"
arguments, it is a matter for the defendant to prove in their
defence. The trustee's actions against NWM N.V. will proceed in
light of the appellate court's ruling.
Odd lot corporate bond trading antitrust litigation
On 25 October 2021, the United States District Court for the
Southern District of New York granted, on several grounds,
defendants' motion to dismiss the class action complaint alleging
that from August 2006 onwards various securities dealers, including
NWMSI, conspired artificially to widen spreads for odd lots of
corporate bonds bought or sold in the United States secondary
market and to boycott electronic trading platforms that would have
allegedly promoted pricing competition in the market for such
bonds. The dismissal is subject to appeal.
Regulatory matters
US investigations relating to fixed-income securities
In October 2017, NWMSI entered into a non-prosecution agreement
(NPA) with the United States Attorney for the District of
Connecticut (USAO) in connection with alleged misrepresentations to
counterparties relating to secondary trading in various forms of
asset-backed securities. In the NPA, the USAO agreed not to file
criminal charges relating to certain conduct and information
described in the NPA, conditional on NWMSI and affiliated companies
complying with the NPA's reporting and conduct requirements during
its term, including by not engaging in conduct during the NPA that
the USAO determines was a felony under federal or state law or a
violation of the anti-fraud provisions of the United States
securities law.
The NatWest Markets business is currently responding to a
separate criminal investigation by the USAO and the US Department
of Justice (DoJ) concerning unrelated trading by certain NWM Plc
and NWMSI former traders involving alleged spoofing. The NPA
(referred to above) has been extended as the criminal investigation
has progressed and related discussions with the USAO and the DoJ,
including relating to the impact of such alleged conduct on the
status of the NPA and the potential consequences thereof, have been
ongoing.
Notes
6. Litigation and regulatory matters continued
On 30 August 2021, NWMSI received a letter from USAO stating
that it had determined that NWMSI had materially breached the NPA
as a result of the alleged spoofing activity and that NWMSI is
subject to prosecution for securities fraud in respect of the
conduct underlying the NPA. NatWest Markets is engaging in
discussions with the U.S. government about the resolution of the
alleged spoofing activity investigation and the USAO's
determination of the breach of the NPA, including why criminal
prosecution of the conduct underlying the NPA should not be
pursued.
The precise duration and outcome of this matter remains
uncertain.
Adverse outcomes or resolution of current or future legal or
regulatory actions (in particular, a finding of criminal liability
in this matter) could have material collateral consequences for NWM
Group's business and result in restrictions or limitations on NWM
Group's operations.
These may include the effective or actual disqualification from
carrying on certain regulated activities and consequences resulting
from the need to reapply for various important licences or obtain
waivers to conduct certain existing activities of NWM Group,
particularly but not solely in the US, which may take a significant
period of time and the results of which are uncertain.
Disqualification from carrying on any activities, whether automatic
as a result of the resolution of a particular matter or as a result
of the failure to obtain such licences or waivers could adversely
impact NWM Group's business, in particular in the US.
This in turn and/or any fines, settlement payments or penalties
could adversely impact NWM Group's reported financial results and
condition, capital position or reputation.
FCA investigation into NatWest Group's compliance with the Money
Laundering Regulations 2007
In July 2017, the FCA notified NatWest Group that it was
undertaking an investigation into NatWest Group's compliance with
the UK Money Laundering Regulations 2007 ("MLR 2007") in relation
to certain money service businesses and related parties.
In March 2021, the FCA notified NatWest Group that it had
commenced criminal proceedings against NWB Plc for three offences
under regulation 45(1) of the MLR 2007 arising from the handling of
the accounts of a UK incorporated customer.
On 7 October 2021, NWB Plc pleaded guilty to the three offences
under regulation 45(1) of the MLR 2007 for failure to comply with
regulation 8(1) of the MLR 2007 between 7 November 2013 and 23 June
2016 and 8(3) and 14(1) of the MLR 2007 between 8 November 2012 and
23 June 2016.
These regulations required the firm to determine and conduct
risk sensitive due diligence and ongoing monitoring of its
customers for the purposes of preventing money laundering. The
offences relate to operational weaknesses between 2012 and 2016,
during which period NWB Plc did not adequately monitor the accounts
of that customer.
NWB Plc has cooperated fully with the FCA since its
investigation began. The FCA has confirmed it will not take action
against any individual current or former employee of NWB Plc.
The case has been remitted to the Crown Court for sentencing,
which will be determined at a hearing scheduled to take place on a
date to be determined by the Crown Court. NWB Plc made a provision
at 30 September 2021 in anticipation of a potential fine being
imposed at that hearing, but is not disclosing the amount as it
remains the matter of ongoing judicial proceedings. In addition to
the fine, other material adverse collateral consequences may occur
as a result of these convictions, which may affect members of the
NWM Group.
7. Post balance sheet events
On 28 October 2021, the NWM Plc Board approved an interim
dividend of GBP250 million, or GBP0.63 per share, to be declared
and payable to NatWest Group plc on 29 October 2021. There has been
no adjustment to the 30 September 2021 condensed consolidated
financial statements. For regulatory reporting purposes, a GBP250
million foreseeable dividend deduction has been applied to the Q3
2021 regulatory capital position.
Other than as disclosed in the accounts, there have been no
other significant events between 30 September 2021 and the date of
approval of these accounts that would require a change to or
additional disclosure in the condensed consolidated financial
statements.
Non-IFRS measures
NWM Group prepares its financial statements in accordance
generally accepted accounting principles (GAAP). This document
contains a number of adjusted or alternative performance measures,
also known as non-GAAP or non-IFRS performance measures. These
measures are adjusted for certain items which management believe
are not representative of the underlying performance of the
business and which distort period-on-period comparison. These
non-IFRS measures are not measures within the scope of IFRS and are
not a substitute for IFRS measures. These measures include:
-- Management analysis of the operating expenses shows strategic costs
and litigation and conduct costs in separate lines on pages 3 and
4. These amounts are included in staff, premises and equipment and
other administrative expenses in the statutory analysis.
-- Funded assets defined as total assets less derivative assets.
-- Management view of income by business before revenue share payments
and excluding own credit adjustments and asset disposals/strategic
risk reduction.
-- Revenue share payments refers to income generated by NatWest Markets
from customers that have their primary relationship with other NatWest
Group segments which as a result is shared with those segments.
-- Asset disposals/strategic risk reduction includes the costs of exiting
positions, which includes changes in carrying value to align to the
expected exit valuation, and the impact of risk reduction transactions
entered into as part of the optimisation of the entity's capital
usage, following the strategic announcements of 14 February 2020.
-- Own credit adjustments are applied to positions where it is believed
that the counterparties would consider NWM Group's creditworthiness
when pricing trades. The fair value of certain issued debt securities,
including structured notes, is adjusted to reflect the changes in
own credit spreads and the resulting gain or loss recognised in income.
Non-IFRS measures
Operating expenses analysis
Statutory analysis (1, 2)
Nine months ended Quarter ended
-------------------------- -----------------------------------
30 September 30 September 30 September 30 June 30 September
2021 2020 2021 2021 2020
Operating expenses GBPm GBPm GBPm GBPm GBPm
Staff costs 370 519 118 118 142
Premises and equipment 59 88 22 18 13
Other administrative expenses 333 454 152 67 106
Depreciation and amortisation 15 17 5 5 3
Total operating expenses 777 1,078 297 208 264
------------------------------ ------------ ------------ ------------ ------- ------------
Non-statutory analysis
Nine months ended
-------------------------------------------
30 September 2021
-------------------------------------------
Litigation Statutory
Strategic and conduct Other operating
Operating expenses costs costs expenses expenses
------------------------------ --------- ----------- -------- ---------
Staff costs 97 - 273 370
Premises and equipment 4 - 55 59
Other administrative expenses 47 (41) 327 333
Depreciation and amortisation 1 - 14 15
Total 149 (41) 669 777
------------------------------ --------- ----------- -------- ---------
Nine months ended
-------------------------------------------
30 September 2020
-------------------------------------------
Litigation Statutory
Strategic and conduct Other operating
Operating expenses costs costs expenses expenses
------------------------------ --------- ----------- -------- ---------
Staff costs 92 - 427 519
Premises and equipment 18 - 70 88
Other administrative expenses 34 127 293 454
Depreciation and amortisation - - 17 17
Total 144 127 807 1,078
------------------------------ --------- ----------- -------- ---------
Quarter ended
-------------------------------------------
30 September 2021
-------------------------------------------
Litigation Statutory
Strategic and conduct Other operating
Operating expenses costs costs expenses expenses
------------------------------ --------- ----------- -------- ---------
Staff costs 32 - 86 118
Premises and equipment 1 - 21 22
Other administrative expenses 20 27 105 152
Depreciation and amortisation 1 - 4 5
Total 54 27 216 297
------------------------------ --------- ----------- -------- ---------
Quarter ended
-------------------------------------------
30 June 2021
-------------------------------------------
Litigation Statutory
Strategic and conduct Other operating
Operating expenses costs costs expenses expenses
------------------------------ --------- ----------- -------- ---------
Staff costs 40 - 78 118
Premises and equipment 2 - 16 18
Other administrative expenses 21 (81) 127 67
Depreciation and amortisation - - 5 5
Total 63 (81) 226 208
------------------------------ --------- ----------- -------- ---------
Quarter ended
-------------------------------------------
30 September 2020
-------------------------------------------
Litigation Statutory
Strategic and conduct Other operating
Operating expenses costs costs expenses expenses
------------------------------ --------- ----------- -------- ---------
Staff costs 33 - 109 142
Premises and equipment (4) - 17 13
Other administrative expenses 3 14 89 106
Depreciation and amortisation - - 3 3
Total 32 14 218 264
------------------------------ --------- ----------- -------- ---------
(1) On a statutory or GAAP basis, strategic costs are included
within staff, premises and equipment and other administrative
expenses. Strategic costs relate to restructuring provisions,
related costs and projects that are transformational in nature.
(2) On a statutory or GAAP basis, litigation and conduct costs
are included within other administrative expenses.
Additional information
Presentation of information
NatWest Markets Plc ('NWM Plc') is a wholly-owned subsidiary of
NatWest Group plc or 'the ultimate holding company'. The NatWest
Markets Group ('NWM Group') comprises NWM Plc and its subsidiary
and associated undertakings. The term 'NatWest Group' comprises
NatWest Group plc and its subsidiary and associated undertakings.
The term 'NWH Group' refers to NatWest Holdings Limited ('NWH') and
its subsidiary and associated undertakings. The term 'NatWest Bank
Plc' or 'NWB Plc' refers to National Westminster Bank Plc.
NWM Plc publishes its financial statements in pounds sterling
('GBP' or 'sterling'). The abbreviations 'GBPm' and 'GBPbn'
represent millions and thousands of millions of pounds sterling,
respectively, and references to 'pence' represent pence in the
United Kingdom ('UK'). References to 'dollars' or '$' are to United
States of America ('US') dollars. The abbreviations '$m' and '$bn'
represent millions and thousands of millions of dollars,
respectively, and references to 'cents' represent cents in the US.
The abbreviation 'EUR' represents the 'euro', and the abbreviations
'EURm' and 'EURbn' represent millions and thousands of millions of
euros, respectively, and references to 'cents' represent cents in
the European Union ('EU').
To aid readability, this document retains references to EU
legislative and regulatory provisions in effect in the UK before 1
January 2021 that have now been implemented in UK domestic law.
These references should be read and construed as including
references to the applicable UK implementation measures with effect
from 1 January 2021.
Western European corporate portfolio
In order to improve efficiencies and best serve customers,
NatWest Group and NWM Group are evaluating whether NatWest Group's
Western European corporate portfolio, including term funding and
revolving credit facilities, as well as certain other transactions
and activities, will remain in the ring-fenced subgroup of NatWest
Group or be transferred or re-booked to NWM Group. Some or all of
the portfolio and other transactions and activities already held in
NWM Group may be transferred or re-booked to the ring-fenced
subgroup of NatWest Group. The timing and quantum of such transfers
or re-bookings, if any, is uncertain.
NatWest Markets Group legal entity disclosures
There is a distinction between the disclosure of the NatWest
Markets operating segment performance in the NatWest Group's Q3
2021 results and the NatWest Markets Group's results presented in
this document, with differences primarily as follows:
-- NatWest Markets Group's Q3 2021 results include its part of the Central items & other segment.
-- NatWest Group's Q3 2021 results reports the NatWest Markets
segment excluding Central items & other.
MAR - Inside Information
This announcement contains information that qualified or may
have qualified as inside information for NatWest Markets Plc, for
the purposes of Article 7 of the Market Abuse Regulation (EU)
596/2014 (MAR) as it forms part of domestic law by virtue of the
European Union (Withdrawal) Act 2018 for NatWest Markets Plc. This
announcement is made by Paul Pybus, Head of Investor Relations for
NatWest Markets Plc.
Statutory results
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 ("the Act"). The statutory accounts for the
year ended 31 December 2020 have been filed with the Registrar of
Companies. The report of the auditor on those statutory accounts
was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Act.
Contact
Paul Pybus NatWest Group Investor Relations +44 (0) 7769161183
----------- --------------------------------- ------------------
Forward-looking statements
This document contains forward-looking statements within the
meaning of the United States Private Securities Litigation Reform
Act of 1995, such as statements that include, without limitation,
the words 'expect', 'estimate', 'project', 'anticipate', 'commit',
'believe', 'should', 'intend', 'will', 'plan', 'could',
'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal',
'objective', 'may', 'endeavour', 'outlook', 'optimistic',
'prospects' and similar expressions or variations on these
expressions. These statements concern or may affect future matters,
such as NWM Group's future economic results, business plans and
current strategies. In particular, this document may include
forward-looking statements relating to NWM Group in respect of, but
not limited to: the impact of the COVID-19 pandemic, NWM Plc's
regulatory capital position and related requirements, its financial
position, profitability and financial performance (including
financial, capital, cost savings and operational targets), the NWM
Group refocusing and implementation of NatWest Group's Purpose-led
strategy, its ESG and climate-related targets, its access to
adequate sources of liquidity and funding, increasing competition
from new incumbents and disruptive technologies, its exposure to
third party risks, its ongoing compliance with the UK ring-fencing
regime and ensuring operational continuity in resolution, its
credit exposures under certain specified scenarios, substantial
regulation and oversight, ongoing legal, regulatory and
governmental actions and investigations, the transition of LIBOR
and other IBOR rates to alternative risk free rates and NWM Group's
exposure to economic and political risks (including with respect to
Brexit and climate change), operational risk, conduct risk, cyber
and IT risk, key person risk and credit rating risk.
Forward-looking statements are subject to a number of risks and
uncertainties that might cause actual results and performance to
differ materially from any expected future results or performance
expressed or implied by the forward-looking statements. Factors
that could cause or contribute to differences in current
expectations include, but are not limited to, the impact of the
COVID-19 pandemic, the outcome of legal, regulatory and
governmental actions and investigation, legislative, political,
fiscal and regulatory developments, accounting standards,
competitive conditions, technological developments, interest and
exchange rate fluctuations, general economic and political
conditions and the impact of climate-related risks and the
transitioning to a low carbon economy. These and other factors,
risks and uncertainties that may impact any forward-looking
statement or NWM Group's actual results are discussed in NWM Plc's
2020 Annual Report and Accounts (ARA), NWM Plc's 2021 Registration
Document, NWM Plc's Interim Results for H1 2021 and other public
filings. The forward-looking statements contained in this document
speak only as of the date of this document and NWM Group does not
assume or undertake any obligation or responsibility to update any
of the forward-looking statements contained in this document,
whether as a result of new information, future events or otherwise,
except to the extent legally required.
Legal Entity Identifier: RR3QWICWWIPCS8A4S074
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