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Banking behemoth NatWest contemplates buying Santander UK for a whopping £11bn, hinting at a potential acquisition wave?

Santander U.K.'s retail banking division was allegedly targeted for purchase by NatWest for approximately £11 billion this year. However, Santander declined the offer.

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Banking giant NatWest allegedly proposed a £11bn acquisition of Santander UK's retail banking...
Banking giant NatWest allegedly proposed a £11bn acquisition of Santander UK's retail banking division earlier in the year, an offer that was turned down by Santander.

Banking behemoth NatWest contemplates buying Santander UK for a whopping £11bn, hinting at a potential acquisition wave?

Headlines:NatWest's Potential Acquisition Spree Post-Government ExitNatWest's Robust Q1 Performance Sets Tone for Future Growth

After reports of a failed £11 billion takeover bid for Santander UK's retail bank arm earlier this year, it seems NatWest might be gearing up for another acquisition spree. Sources close to the Financial Times suggest that the British bank is preparing for new opportunities following the Government's imminent exit from its stake in the lender within weeks.

The Government's involvement in NatWest began back in 2008 when it took a 84% stake in the bank during the height of the financial crisis. Since then, the Government has been gradually unwinding its stake, with the Government's ownership falling below 30% for the first time in March 2024. With the stake now just 2%, the Government looks set to completely exit within weeks.

As the UK's biggest retail bank, NatWest is in a strong financial position. The bank reported impressive Q1 results with income rising 15% to £4 billion and operating profits increasing 36% to £1.8 billion. A key measure of financial strength, the CET1 ratio, stood at 13.8% at the end of the quarter.

Susannah Streeter, head of money and markets at stockbroker Hargreaves Lansdown, believes that with this robust financial standing, NatWest may be looking for acquisition opportunities. Streeter remarks, "With its financial position robust, management will may well be eyeing up opportunities for acquisition given the tailwinds it's been enjoying."

Regarding potential acquisition targets, NatWest's Chief Executive Officer, Alison Rose, asserted that the bank will be thoughtful about its decisions, stating, "We will obviously be thoughtful and look across the market from an M&A perspective. It's a high bar both financially and operationally. It needs to be absolutely compelling from a shareholder perspective."

  • Monzo IPO: Digital Bank Plans Stock Market Float with £6 Billion Valuation A close rival of NatWest, Monzo, is planning a stock market float with an anticipated valuation of £6 billion. The digital bank, known for its easy-to-use services and mobile app, is looking to leverage its growing user base and increasing market share.

Strategic Priorities for NatWest Group:

  1. Active Balance Sheet Strategy: NatWest emphasizes strong balance sheet management as a foundation for success, driving consistent profits and supporting its business model.
  2. Return to Private Ownership: The key focus for NatWest is returning to private ownership, which marks a significant milestone as outlined by its leadership.

According to research, NatWest expects to achieve a return on tangible equity at the upper end of its guided range of 15% to 16% in 2025, with income excluding notable items reaching the upper end of its previously guided range of £15.2 billion to £15.7 billion. For more detailed information on financial projections and consideration of the economic outlook, please refer to the enrichment section provided.

NatWest's strategic vision includes a well-balanced combination of active risk management, a focused approach on strengthening its core operations, and adaptation to economic changes. The bank also prioritizes embracing new technologies to streamline its processes and better serve customers.

  1. With evidence of a strong financial standing, NatWest might be considering possible investment opportunities in the banking sector.
  2. The anticipated exit of the Government from its stake in NatWest could potentially open doors for multiple acquisitions by the bank.
  3. In light of the imminent privatization, NatWest's strategic priorities include focusing on strengthening its core operations and adapting to economic changes.
  4. Analysts suspect that with the financial success and growth following the Government's exit, NatWest might be eyeing potential acquisitions in the pension scheme management or business sectors to expand its business portfolio.

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