NatWest Group has entered into a definitive agreement to acquire UK wealth management firm Evelyn Partners in a deal valued at £2.7 billion, the bank announced. Concurrently, the bank revealed plans for a £750 million share buyback program.
Strategic Shift Toward Steady Income
The acquisition represents a significant strategic push by NatWest into wealth management, a sector known for generating recurring fee income. This move comes as UK banks anticipate pressure on net interest margins from potential rate cuts, making fee-based revenue streams increasingly attractive. The combined entity is projected to oversee roughly £127 billion in assets under management and administration.
Market Reaction and Financial Details
Investors reacted cautiously to the news, with NatWest shares declining around 4% in early London trading. The bank indicated the transaction would be funded from existing resources and is expected to deliver approximately £100 million in annual cost synergies. However, the deal will reduce NatWest's CET1 capital ratio by an estimated 130 basis points.
Completion of the acquisition is anticipated in the summer of 2026, pending necessary regulatory approvals. The integration will combine Evelyn's operations, which include the Bestinvest platform, with NatWest's existing private banking and wealth division, home to the historic Coutts brand.
Competitive Landscape and Challenges
This transaction positions NatWest to compete more directly with peers like HSBC and Lloyds, which have also been bolstering their wealth management offerings. Analysts note the deal fills a gap in NatWest's service suite for affluent clients. However, successful integration, including retaining key advisers and clients, alongside navigating potential market volatility, presents ongoing challenges.
Evelyn's private equity owners, Permira and Warburg Pincus, endorsed the sale, citing the strategic benefits of increased scale in the UK wealth sector.
