Natwest looks at slashing costs by £3bn over the next five years
Natwest will next week consider proposals to cut costs by £3bn over the next five years as it prepares for a wave of bad debts thanks to the coronavirus crisis.
Top managers from the bank, which was renamed from RBS just this week, will look at plans that would see annual operating expenses cut from £7bn to £4bn, according to the Sunday Times.
Many of the UK’s banks will release trading reports next week, with the coronavirus crisis expected to have severely dented revenues for lenders.
Record low interest rates are also expected to affect the sector’s bottom line over the next several years.
Analysts are expecting Natwest to report that it is preparing for up to £1.5bn in bad loans, potentially putting it at a loss for the second quarter.
The cost cutting drive could reportedly come through a greater reliance on technology, which would see job losses and branch closures.
A Natwest source told the Sunday Times: “Nothing is planned on branches this year, but over the next five years all banks will take decisions on branches if the trend during Covid continues.”
A Natwest spokesperson denied the bank was preparing to cut costs.
“We do not have any plans of this type,” they said.
“We set out our strategy in February, which includes a £250m cost reduction target, and we are committed to delivering on that.”
The largely state-owned bank changed its name from RBS to Natwest on Wednesday, after first flagging the change in February.
The group will remain headquartered in Edinburgh, and the name change will not affect RBS bank branches.
Chief executive Alison Rose said it was an “historic” day for the bank and “although there will be no changes to our customer brands, it’s a symbolic moment for our colleagues and stakeholders.”
“The bank has changed fundamentally over the last decade and now is the right time to align our group name with the brand under which the majority of our business is delivered,” she said.