Shares of NatWest Group declined sharply in early London trading on Monday following the bank's announcement of a £2.7 billion agreement to acquire wealth management firm Evelyn Partners. The stock dropped 3.9% to 633.6 pence, reflecting market apprehension about the transaction's effect on capital reserves.
Capital and Integration in Focus
The acquisition is projected to reduce NatWest's key CET1 capital ratio by approximately 130 basis points. Although the bank concurrently unveiled a £750 million share repurchase program, investor attention remained fixed on the capital consumption and the execution challenges of merging the two businesses.
NatWest's move significantly expands its presence in fee-based revenue streams, aligning with a broader industry shift as banks seek stable income amid fluctuating interest rates. The combined entity would oversee around £127 billion in assets under management and administration, positioning it as a leading UK player in private banking and wealth services.
Strategic Rationale and Market Reaction
Chief Executive Paul Thwaite described the purchase as a "unique opportunity" to enhance the group's financial planning and investment offerings. The bank anticipates the deal will boost its fee income by roughly 20%, excluding potential revenue synergies, and deliver about £100 million in annual cost savings after an estimated £150 million in integration expenses.
Analysts noted the transaction's transformative potential for NatWest's affluent client segment but highlighted the timing as delicate. With annual financial results scheduled for release on February 13, shareholders are keenly awaiting further clarity on capital returns and the strategic roadmap.
The market's initial negative response underscores the balance banks must strike between growth investments and capital returns to shareholders. Success now hinges on seamless integration, realization of projected cost savings, and sustained asset growth at Evelyn Partners, which reported EBITDA of £179 million for 2025.