Will NatWest need a new set of corporate clothes?

Following allegations of money laundering made by the FCA, the bank may find itself in desperate need of a rebrand, James Moore writes

RBS changed its name to NatWest after being involved in multiple scandals (PA)

From the financial crisis onward, you could easily have renamed Royal Bank of Scotland the Royal Bank of Scandal given the sheer number it was involved in. 

No wonder it decided upon a change of corporate clothes, resurrecting the NatWest name for the group, and most of its activities, while adopting the latter’s soft purple colours and talking about its cuddly new “purpose-led” approach to business. 

Perhaps it jumped the gun.

The Financial Conduct Authority has taken the rare step of filing criminal proceedings against the bank, alleging failure to adhere to the requirements of three of the 2007 Money Laundering Regulations between 11 November 2011 and 19 October 2016. 

When I say rare, I mean it. In fact, this is the first time since the FCA formally took over the conduct part of the Financial Services Authority’s role in April 2001 that it has taken such a step. 

Read more

• RBS changes name to NatWest in bid to draw line under 12 years of scandals
• Royal Bank of Scotland needs to overhaul its behaviour – not just its name

It’s not like the watchdog is lacking in powers to haul regulated firms over the coals and it hasn’t exactly been shy when it comes to levying eight, and even nine, figure “blockbuster” fines in the past. 

The problem with those fines is you do have to ask whether they’re an effective deterrent. 

As a longtime observer of the banking scene, I’ve often wondered whether they have become so common that they’re just considered by banking executives as part of the cost of doing business. 

That certainly seems to be the prevailing view in the City. Analysts typically shrug in response to them before moving on to the net interest margin or whatever. A criminal conviction, however? Harder to ignore.

It’s not as if you can jail a bank. The sentence, if NatWest is convicted, will be just another fine, although there aren’t any limits on how much a judge could levy. 

But just think about the potential fallout if happens. Scribblers like me will forever be able to describe the still 60 per cent state-owned NatWest as a criminal bank. You can only imagine how the headlines might read.

When the regulator comes knocking banks usually like to settle swiftly, say they’re sorry and move on. 

NatWest might be motivated to fight if it thinks it can beat the rap because moving on from this will be harder. 

But fighting is risky too, because that would lead to what might turn into a highly entertaining and very public court case. 

The FCA says the case arises from the handling of funds deposited into accounts operated by a UK incorporated customer. In a statement, published on its website, it says: “The FCA alleges that increasingly large cash deposits were made into the customer’s accounts. It is alleged that around £365m was paid into the customer’s accounts, of which around £264m was in cash.”

I’m fascinated: what would £264m look like? 

The prosecution will spend days upon days trying to make NatWest look like a chump and the best lines will be all over the media. 

It should be stated that such a move is not entirely risk-free for the FCA. It’ll be the chump if it takes this to court and then fails to make its case. The recriminations will surely fly. 

Right now, however, I’d much rather be in the FCA’s boardroom than I would in NatWest’s, even if it’s completely innocent of all the charges. 

Anyway, does anyone have any ideas if NatWest feels it needs another new name and set of corporate colours? Bank of Britain? National Friendly Banking Corp? Um, Purpose Bank? With a set of light green pyjamas? Lloyds has got dark green sewn up.