If the government presses ahead with returning NatWest to private ownership, investors should expect a discounted offer. But a lower price would not necessarily make the lender an appealing prospect.
NatWest had a clear advantage over other mainstream lenders in capitalising on rising rates: a greater base of customer deposits, a cheaper source of funding than the wholesale market. Yet the easy boost from the rapid rise in interest rates is fading.
The bank’s net interest margin peaked in the first quarter of this year. By the third quarter the margin, the difference between what a bank earns on loans and pays out in interest on customer deposits, had fallen to 2.94 per cent.
Customers are moving their cash from current accounts to fixed-term products
