Shares of NatWest Group declined sharply on Monday, dropping approximately 4.9% following the announcement of a major strategic acquisition and a new capital return program. The UK-based bank has agreed to purchase wealth manager Evelyn Partners for £2.7 billion, its most significant deal since its state bailout in 2008.
Strategic Expansion and Capital Impact
Alongside the acquisition, NatWest unveiled a £750 million share repurchase initiative. The bank indicated the transaction will be funded from existing resources but will reduce its core equity tier 1 (CET1) ratio—a key measure of financial strength—by roughly 130 basis points. The acquisition is positioned to elevate NatWest's private banking and wealth management division to a leading position in the UK, boosting combined assets under management and administration to £127 billion.
Financial Rationale and Market Reaction
Chief Executive Paul Thwaite described the move as a "unique opportunity" to extend financial planning and investment services to the bank's 20 million customers. The bank targets annual run-rate cost savings of about £100 million, though it expects to incur £150 million in integration expenses to achieve them. Fee income is projected to increase by approximately 20%, even before accounting for potential revenue synergies from cross-selling.
Analyst reception was mixed. While some acknowledged the strategic fit in bolstering NatWest's upscale wealth segment, others expressed concern over the valuation. The deal values Evelyn Partners at 9.7 times its 2025 EV/EBITDA. Certain analysts estimated the acquisition could dilute earnings per share by around 2% through 2028 compared to a scenario where the deal did not proceed.
Investor attention now turns to NatWest's annual results scheduled for February 13, where further guidance on capital allocation, returns, and the integration roadmap for Evelyn Partners is anticipated. The transaction is expected to close in summer 2026, pending regulatory approvals.
