(Recasts, adds details, updates share price fall)
By Iain Withers
LONDON, April 29 (Reuters) - Britain's NatWest would move
its headquarters out of Scotland in the event of a vote in
favour of independence, its CEO Alison Rose said, only days
before parliamentary elections there.
State-backed NatWest, which until last year was
called Royal Bank of Scotland, has been based for 294 years in
the Scottish capital Edinburgh.
"In the event that there was independence for Scotland our
balance sheet would be too big for an independent Scottish
economy. And so we would move our registered headquarters, in
the event of independence, to London," Rose told reporters.
Investment bank Morgan Stanley this week put the chance of
Scottish independence from the UK at 15%, while rival Citi put
it as high as 35%, ahead of crucial elections next week where
the issue will be centre stage.
"We are neutral on the issue of Scottish independence. It's
something for the Scottish people to decide," Rose said on
Thursday after NatWest reported its first quarter results.
NatWest had said ahead of Scotland's 2014 referendum on
independence that it would move its registered office to London,
but Rose's comments are her first substantive remarks on the
issue since becoming CEO in 2019.
Any change in HQ address would not impact staff or customers
at NatWest, which returned to profit in the first quarter after
joining rivals in releasing some of the provisions it had set
aside to cover expected pandemic-related bad loans.
But it warned a money laundering case could trigger a big
bill after Rose's efforts to clean up NatWest's image hit a
setback last month with criminal charges against it.
The Financial Conduct Authority alleges it failed to detect
suspicious activity by a client over five years. If convicted,
it could face an unlimited fine, which NatWest said could lead
"to further substantial costs" and provisions.
"We're very disappointed with the situation. We take AML
(anti-money-laundering) very seriously and we invest very
significantly in our services," Rose said.
The looming court case comes as NatWest reported a pre-tax
profit of 946 million pounds ($1.32 billion), almost double an
average of analyst forecasts. The bank made a 519 million pound
pre-tax profit in the same period last year.
REASONS FOR OPTIMISM
Like HSBC and Lloyds, NatWest's profits
were boosted by the release of cash set aside for bad loans, but
only got a modest lift of 102 million pounds.
The bank - which remains 60% taxpayer-owned following a
government bailout in the 2007-09 financial crisis - slumped to
a 351 million pound pre-tax loss in 2020.
Rose said unpaid loans due to the pandemic remained low and
vaccine rollouts and reduced lockdowns had given "reasons for
optimism" but it was too early to upgrade NatWest's economic
forecasts, striking a more cautious tone than Lloyds.
NatWest shares fell 4%, compared to a 1% rise for the FTSE
100, following its release of results.
Banks saw their finances dented by the pandemic in 2020, but
domestically-focused NatWest was a relative outlier in recording
an annual loss, hit particularly hard by a household spending
crunch and missing the lift Barclays and HSBC got from
investment banks with an international footprint.
Rose laid out plans to axe costs in February, including
winding down under-performing Irish arm Ulster Bank.
NatWest bought back 1.1 billion pounds worth of stock from
the government to reduce its stake from 62% last month, cutting
its core capital buffer to 18.2% from 18.5%.
The bank's deposits jumped by a further 21.6 billion pounds
over the quarter as customers continued to rein in spending,
while it granted 9.6 billion pounds of new mortgages amid a
house buying boom.
($1 = 0.7165 pounds)
(Reporting by Iain Withers, Editing by Anna Irrera, Carmel
Crimmins and Alexander Smith)
HSBC Holdings (HSBA)
Barclays (BARC)
Lloyds (LLOY)
Natwest (NWG)