RBS Resurrects NatWest Markets as Part of BOE Ringfencing Plans

  • New structure will help bank meet plans taking effect in 2019
  • Bank selects name used by the securities unit in the 1990s

Royal Bank of Scotland Group Plc said it would resurrect the NatWest Markets brand for its investment bank as part of its plan to meet rules designed to prevent a repeat of its 45.5 billion-pound ($59 billion) taxpayer-funded bailout during a financial crisis.

RBS will return to the name used by the former NatWest Plc securities unit during the 1990s before the Edinburgh-based lender acquired the bank at the turn of the century, according to a statement on Friday. The change is part of wider steps taken by the bank to reorganize its legal structure to prepare for new U.K. rules.

The steps taken by RBS are aimed at meeting Bank of England ringfencing rules to protect consumer banks from their riskier trading operations to avoid any future need for a government-led rescue. Barclays Plc is splitting its U.K. unit from its corporate and international division as part of efforts to meet the regulations, which come into force from 2019.

“Our proposed future structure under the ringfencing legislation and our brand strategy are key elements of the bank we are becoming,” RBS Chief Executive Officer Ross McEwan said in the statement. The changes announced Friday are subject to regulatory, board and other approvals.

Eight years after the financial crisis the U.K. government still owns 72 percent of RBS, with little prospect of taxpayers recovering all the money spent rescuing the lender in 2008 and 2009. The bank trades at 177.1 pence a share, less than half the government’s break-even price of 407 pence apiece.

The ringfencing rules will affect Britain’s banks in different ways. While Barclays and HSBC Holdings Plc will have large operations outside of their deposit-funded domestic businesses, Lloyds Banking Group Plc plans to keep about 97 percent of its assets inside its ringfenced unit.

Ringfencing has raised concerns over the costs of implementation and that of financing investment-banking operations separately. Barclays’s non-ringfenced bank will probably get a credit rating one step lower than its U.K. deposit-taking business will achieve, S&P Global Ratings wrote in a note to clients in March.