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NatWest Markets signals relaunch, not retreat from investment banking
Management shake-up sees four executives promoted into global product roles
14 Aug 2020 | Keith Mullin
Keith Mullin
Keith Mullin

It’s hardly a secret that risk-weighted assets (RWAs) at NatWest Markets (NWM), the investment banking division of NatWest Group (the recently renamed Royal Bank of Scotland Group) are being actively shrunk as management sets about ditching low-returning and inefficient assets and businesses en route to building a smaller and simpler business. But by the same token, senior folks at NWM are pretty tired of people constantly banging on that it’s on a path to quitting investment banking altogether.

In this context, insiders say the management shake-up, unveiled on August 13, signals not a fast track to the exit door, but rather the creation of an organisational set-up that’s better geared to meeting its new purpose of serving the group’s corporate and institutional customers. Senior insiders say the upbeat message to staff is that NWM is an integral part of the parent group.

“NatWest Markets has been on a journey in the last few years and has had to do a lot of refocusing. But this is essentially a relaunch under a single brand and a one-bank message. There’s no way we’re coming out of investment banking,” one hardy insider told me. In fact, NWM has had a good run this year in certain of its core investment banking businesses, the result of a concerted effort to build market share.

When it released its 2019 results earlier this year, group CEO Alison Rose noted that corporate and institutional customers represented around 75 billion pounds sterling of RWA equivalents, but generated underlying returns of just 2%. As NWM is refocused, those customers will over time represent 60 billion pounds sterling of RWAs. But returns are targeted to improve to around 8%. That’s the point here.

On the way to meeting its currently stated goals, there’s been some pretty unsettling and constant executive churn. That needs to settle down. Scott Satriano, head of financing and risk solutions; Kieran Higgins, head of trading and flow sales; and Oliver Cooke, chief digital officer, all went in this week’s re-organization. Their departures come just two months after Robert Begbie was confirmed as CEO of NWM. Begbie himself had been interim head for six months, ever since Chris Marks, the previous CEO, was ousted at the back end of last year alongside CFO Richard Place. David King was brought in from MUFG as the new CFO in June while Donal Quaid was confirmed as group treasurer.

Satriano and Higgins had been the only business-line heads on NWM’s 16-strong senior executive team so their ouster did cause a lot of speculation. But the August 13 executive announcements saw four executives promoted into global product roles, all on an interim basis and reporting to Begbie.

Jonathan Peberdy, global head of syndicate, was named head of capital markets. A NWM veteran, Peberdy has been at the firm since joining NatWest Global Financial Markets as a graduate in 1999. He is in effect taking on the former financing and risk solutions business previously run by Satriano.

The capital markets business spans syndicate, origination, structuring and advisory for primary capital markets and private financing, including ESG (environmental, social and governance) and financial institution ratings advisory. Since most of the group’s corporate customers are covered from the commercial bank, Peberdy’s business will have to work closely with the rest of the group. People say the new structure should energize cross-unit engagement.

The origination business is centred on the UK and Western Europe, but NWM depends on a global distribution model. The Asia-Pacific region will continue to act as a distribution and trading hub; the US will continue its rates and foreign exchange (FX) sales and trading activities as well as its US private placement and Yankee bond origination businesses. “The geographical footprint is important in bringing global distribution to our capital markets customers and is an essential part of offering,” said an internal source.

On the public side, Simon Manwaring, head of FX trading, and David Henness, head of EMEA flow rates trading, were appointed as co-heads of trading. Manwaring has been with the firm since 2013; Henness since 2015. Meanwhile, Ian Donaldson was appointed head of customer sales across FX, rates and credit. He was previously head of EMEA & APAC flow sales and has been with NWM since 2016.

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