REG - NatWest Group plc - NatWest Group plc - Annual Report

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14/02/2025 07:15

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RNS Number : 1142X  NatWest Group plc  14 February 2025

 

 

 

 

 

 

NatWest Group plc 14 February 2025

Annual Report and Accounts 2024

Pillar 3 Report 2024

 

A copy of the Annual Report and Accounts 2024 for Group plc will shortly be
submitted to the National Storage Mechanism and will be available for
inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . The document will
be available on NatWest Group plc's website at
https://investors.natwestgroup.com/reports-archive
(https://investors.natwestgroup.com/reports-archive)

 

A printed version will be mailed to shareholders who have opted for a hard
copy ahead of the Annual General Meeting for which formal Notice will be given
in due course.

 

We have also published the 2024 Pillar 3 report, available on our website.

 

For further information, please contact:

Media Relations

+44 (0) 131 523 4205

 

Investor relations Claire Kane

+44 (0) 207 672 1758

 

For the purpose of compliance with the Disclosure Guidance and Transparency
Rules, this announcement also contains risk factors and details of related
party transactions extracted from the Annual Report and Accounts 2024 in full
unedited text. Page references in the text refer to page numbers in the Annual
Report and Accounts 2024.

 

Principal Risks and Uncertainties

Set out below are certain risk factors that could have a material adverse
effect on NatWest Group's future results, its financial condition and/or
prospects and cause them to be materially different from what is forecast or
expected, and directly or indirectly impact the value of its securities. These
risk factors are broadly categorised and should be read in conjunction with
other risk factors in this section and other parts of this annual report,
including the forward-looking statements section, the strategic report and the
risk and capital management section. They should not be regarded as a complete
and comprehensive statement of all potential risks and uncertainties facing
NatWest Group.

Economic and political risk

NatWest Group, its customers and its counterparties face continued economic
and political risks and uncertainties in the UK and global markets, including
as a result of inflation and interest rates, supply chain disruption, and
geopolitical developments.

As a principally UK-focused banking group, NatWest Group is affected by global
economic and market conditions and is particularly exposed to those conditions
in the UK. Uncertain and volatile economic conditions in the UK or globally
can create a challenging operating environment for financial services
companies such as NatWest Group.

The outlook for the UK and the global economy is affected by many dynamic
factors including: GDP, unemployment, inflation and interest rates, asset
prices (including residential and commercial property), energy prices,
monetary and fiscal policy (such as increases in bank levies), supply chain
disruption, protectionist policies or trade barriers (including tariffs).

Economic and market conditions could be exacerbated by a number of factors
including: instability in the UK and/or global financial systems, market
volatility and change, fluctuations in the value of the pound sterling, new or
extended economic sanctions, volatility in commodity prices, political
uncertainty, concerns regarding sovereign debt (including sovereign credit
ratings), any lack or perceived lack of creditworthiness of a counterparty or
borrower that may trigger market-wide liquidity problems, changing
demographics in the markets that NatWest Group and its customers serve, rapid
changes to the economic environment due to the adoption of technology,
automation, artificial intelligence, or due to the consequences of climate
change, biodiversity loss, nature degradation and/or increasing social and
other inequalities.

NatWest Group is also exposed to risks arising out of geopolitical events or
political developments that may hinder economic or financial activity levels
and may, directly or indirectly, impact UK, regional or global trade and/or
NatWest

Group's customers and counterparties. NatWest Group's business and performance
could be negatively affected by political, military or diplomatic events,
geopolitical tensions, armed conflict (for example, the Russia-Ukraine
conflict and Middle East conflicts), terrorist acts or threats, more severe
and frequent extreme weather events, widespread public health crises, and the
responses to any of the above scenarios by various governments and markets.

In recent years, the UK has experienced significant political uncertainty.
NatWest Group may also face political uncertainty in Scotland if there is
another Scottish independence referendum. Scottish independence may adversely
affect NatWest Group plc both in relation to its entities incorporated in
Scotland and in other jurisdictions. Any changes to Scotland's relationship
with the UK or the EU may adversely affect the environment in which NatWest
Group plc and its subsidiaries operate and may require further changes to
NatWest Group, independently or in conjunction with other mandatory or
strategic structural and organisational changes, any of which could adversely
affect NatWest Group.

The value of NatWest Group's own and other securities may be materially
affected by economic and market conditions. Market volatility, illiquid market
conditions and disruptions in the financial markets may make it very difficult
to value certain of NatWest Group's own and other securities, particularly
during periods of market displacement. This could cause a decline in the value
of NatWest Group's own and other securities, or inaccurate carrying values for
certain financial instruments.

In addition, financial markets are susceptible to severe events evidenced by,
or resulting in, rapid depreciation in asset values, which may be accompanied
by a reduction in asset liquidity. Under these conditions, hedging and other
risk management strategies may not be as effective at mitigating losses as
they would be under more normal market conditions. Moreover, under these
conditions, market participants are particularly exposed to trading strategies
employed by many market participants simultaneously (and often automatically)
and on a large scale, increasing NatWest Group's counterparty risk. NatWest
Group's risk management and monitoring processes seek to quantify and mitigate
NatWest Group's exposure to extreme market moves. However, market events have
historically been difficult to predict, and NatWest Group, its customers and
its counterparties could realise significant losses if severe market events
were to occur.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

Changes in interest rates will continue to affect NatWest Group's business and
results.

NatWest Group's performance is affected by changes in interest rates.
Benchmark overnight interest rates, such as the UK base rate, decreased in
2024, and forward rates suggest that interest rates will continue to decline
in 2025. Stable interest rates support more predictable income flow and less
volatility in asset and liability valuations, although persistently low and
negative interest rates may adversely affect NatWest Group. Further,
volatility in interest rates may result in unexpected outcomes both for
interest income and asset and liability valuations which may adversely affect
NatWest Group. For example, decreases in key benchmark rates such as the UK
base rate may adversely affect NatWest Group's net interest margin, and
unexpected movements in spreads between key benchmark rates such as sovereign
and swap rates may in turn affect liquidity portfolio valuations. In addition,
unexpected sharp rises in rates may also have negative impacts on some asset
and derivative valuations. Moreover, customer and investor responses to rapid
changes in interest rates can have an adverse effect on NatWest Group. For
example, customers may make deposit choices that provide them with higher
returns than those being offered by NatWest Group. Alternatively, NatWest
Group may not respond with competitive products as rapidly, for example
following an interest rate change, which may in turn decrease NatWest Group's
net interest income.

Movements in interest rates also influence and reflect the macroeconomic
situation more broadly, affecting factors such as business and consumer
confidence, property prices, default rates on loans, customer behaviour (which
may adversely impact the effectiveness of NatWest Group's hedging strategy)
and other indicators that may indirectly affect NatWest Group.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

Fluctuations in currency exchange rates may adversely affect NatWest Group's
results and financial condition.

Decisions of central banks (including the BoE, the European Central Bank
('ECB') and the US Federal Reserve) and political or market events, which are
outside NatWest Group's control, may lead to sharp and sudden fluctuations in
currency exchange rates.

Although NatWest Group is principally a UK-focused banking group, it is
subject to structural foreign exchange risk from capital deployed in NatWest
Group's foreign subsidiaries, branches and other strategic equity
shareholdings. NatWest Group also relies on issuing securities in non-sterling
currencies, such as US dollars and euros, that assist in meeting NatWest
Group's regulatory requirements. In addition, NatWest Group conducts banking
activities in non-sterling currencies (for example, loans, deposits and
dealing activity) which affect its revenue. NatWest Group also uses service
providers based outside the UK for certain services and as a result certain
operating results are subject to fluctuations in currency exchange rates.

NatWest Group maintains policies and procedures designed to manage the impact
of its exposure to fluctuations in currency exchange rates. Nevertheless,
changes in currency exchange rates, particularly in the sterling-US dollar and
sterling-euro rates, may adversely affect various accounting and financial
metrics including, the value of assets, liabilities (including the total
amount of instruments eligible to contribute towards the minimum requirement
for own funds and eligible liabilities ('MREL')), foreign exchange dealing
activity, income and expenses, RWAs and hence the reported earnings and
financial condition of NatWest Group.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

HM Treasury (or UKGI on its behalf) could exercise, or be perceived as being
capable of exercising, influence over NatWest Group.

In its Autumn Budget 2024, the UK Government confirmed its commitment to exit
its shareholding in NatWest Group plc by 2025-2026 subject to market
conditions and sales representing value for money for taxpayers. Moreover,
following various prior sell-downs of parts of its shareholding in NatWest
Group plc HM Treasury is no longer a "controlling shareholder" of NatWest
Group plc. As at 13 January 2025, HM Treasury held 8.90% of the ordinary share
capital with voting rights of NatWest Group plc.

HM Treasury has indicated that it intends to respect the commercial decisions
of NatWest Group and that NatWest Group will continue to have its own
independent board of directors and management team determining its own
strategy. However, for as long as HM Treasury remains NatWest Group plc's
largest single shareholder, HM Treasury and UK Government Investments Limited
('UKGI') (as manager of HM Treasury's shareholding) could exercise, or be
perceived as being capable of exercising, influence over NatWest Group plc,
such as on matters relating to changes to NatWest Group's directors and senior
management, its capital strategy, dividend policy, remuneration policy or the
conduct by NatWest Group of its operations. HM Treasury or UKGI's approach
largely depends on government policy, which could change. Any exercise of such
influence, or the perception that such influence may be exercised, may have an
adverse effect on NatWest Group's reputation or the price of its securities.

The way in which HM Treasury or UKGI exercises HM Treasury's rights as NatWest
Group's largest single shareholder could give rise to conflicts between the
interests of HM Treasury and the interests of other shareholders, including as
a result of a change in government policy, which may in turn adversely affect
NatWest Group.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, reputation, and/or the price of its
securities.

Business change and execution risk

The implementation and execution of NatWest Group's strategy carries execution
and operational risks and it may not achieve its stated aims and targeted
outcomes.

NatWest Group's strategy (including the strategic priorities of disciplined
growth, bank-wide simplification and active balance sheet and risk management)
is intended to reflect the rapidly changing environment and backdrop of
significant disruption in society driven by technology and changing customer
expectations.

Further, shifting trends including digitalisation, decarbonisation,
automation, artificial intelligence, e-commerce and hybrid working, have
resulted in significant market volatility and change.

There is also increasing investor, employee, stakeholder, regulatory and
customer scrutiny regarding how businesses address these changes and related
environmental challenges, including climate change, biodiversity and other
sustainability issues, including how NatWest Group supports its customers'
transition to net zero, is tackling inequality, working conditions, workplace
health, safety and wellbeing, diversity and inclusion, data protection and
management, workforce management, human rights and supply chain management.

Many factors may adversely impact the successful implementation of NatWest
Group's strategy, including:

-      macroeconomic challenges which may adversely affect NatWest
Group's customers, and could in turn adversely impact certain strategic
initiatives for NatWest Group (see 'NatWest Group, its customers and its
counterparties face continued economic and political risks and uncertainties
in the UK and global markets, including as a result of inflation and interest
rates, supply chain disruption, and geopolitical developments');

-      changing customer expectations and behaviour in response to
macroeconomic conditions or developments, technology and other factors which
could reduce the profitability, competitiveness, or volume of services NatWest
Group offers;

-      the rapid emergence and deployment of new technologies (such as
artificial intelligence, quantum computing, blockchain and digital currencies)
resulting in a potential shift across the market towards products and services
that are not part of NatWest Group's core offering today;

-      increased competitive threats from incumbent banks, fintech
companies, large retail and technology conglomerates and other new market
entrants (including those that emerge from mergers and consolidations) who may
have competitive advantages in terms of scale, technology and customer
engagement; and

-      changes to the regulatory environment and associated requirements
which could lead to shifts in operating cost and regulatory capital
requirements that impact NatWest Group's product offerings and business models
(see 'NatWest Group's businesses are subject to substantial regulation and
oversight, which are constantly evolving and may adversely affect NatWest
Group; and NatWest Group could incur losses or be required to maintain higher
levels of capital as a result of limitations or failure of various models.')

Delivery of NatWest Group's strategy will require:

-      maintaining effective governance, procedures, systems and controls
giving effect to NatWest Group's strategy;

-      maintaining effective conflicts of interest policies to mitigate
the increased risk of breach of the UK ring-fencing regime due to the creation
of the Commercial & Institutional business segment;

-      managing a broad range of risks and opportunities related to
changes in: the macroeconomic environment, customer expectations and
behaviour, technology, regulation, competitiveness and climate and other
sustainability-related areas;

-      achieving the stated financial, capital and operational targets
and expectations within the relevant timeframes; and

-      continued cost-controlling measures, which may result in
provisions in connection with a lower NatWest Group cost base, may divert
investment from other areas, and may vary considerably from year to year.

In pursuing its strategy, NatWest Group may not be able to successfully: (i)
implement some or all aspects of its strategy; (ii) meet any or all of the
related targets or expectations of its strategy; and otherwise realise the
anticipated benefits of its strategy, in a timely manner, or at all; or (iii)
realise the intended strategic objectives of any other future strategic or
growth initiative. The scale and scope of NatWest Group's strategy and the
intended changes continue to present material business, operational and
regulatory (including compliance with the UK ring-fencing regime), conflicts,
legal, execution, IT system, cybersecurity, internal culture, conduct and
people risks. Implementing changes and strategic actions, including in respect
of any growth, simplification or cost-saving initiatives, requires the
effective application of robust governance and controls frameworks and IT
systems and there is a risk that NatWest Group may not be successful in these
respects.

The implementation of NatWest Group's strategy could result in materially
higher costs or risks than initially contemplated (including due to material
uncertainties and factors outside of NatWest Group's control) and may not be
completed as planned (both in terms of substantive targets and timing), or at
all. This could lead to additional management actions by NatWest Group.

Additionally, as a result of the UK's withdrawal from the EU, certain aspects
of the services provided by NatWest Group require local licences or individual
equivalence decisions (temporary or otherwise) by relevant regulators.

In April 2024, the European Parliament approved the Banking Package (CRR
III/CRD VI). From 10 January 2027, non-EU firms providing 'banking services'
will be required to apply for and obtain authorisation to operate as third
country branches in each relevant EU member state where they provide these
services, unless an exemption applies. NatWest Group continues to evaluate its
EU operating model, making adaptations as necessary. Changes to, or
uncertainty regarding, NatWest Group's EU operating model have been, and may
continue to be, costly and may: (i) adversely affect customers and
counterparties who are dependent on trading with the EU or personnel from the
EU; and/or (ii) result in further costs and/or regulatory sanction, due to a
failure to receive the required regulatory permissions and/or further changes
to NatWest Group's business operations, product offering, customer engagement,
and regulatory requirements.

Each of these risks, and others identified in this section entitled 'Principal
Risks and Uncertainties', individually or collectively could jeopardise the
implementation and delivery of NatWest Group's strategy, impact NatWest
Group's products and services offering, its reputation with customers or
business model and adversely affect NatWest Group's ability to deliver its
strategy and meet its targets, guidance, and forecasts.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

Acquisitions, divestments, or other transactions by NatWest Group may not be
successful.

NatWest Group may decide to undertake acquisitions, investments, the purchase
of assets and liabilities, divestments, restructurings, reorganisations, joint
ventures and other strategic partnerships, as well as other transactions and
initiatives. In doing so, NatWest Group may have to compete with larger banks
or financial institutions or other larger entities offering financial services
products (including those that emerge from mergers and consolidations, as well
as retail and technology conglomerates). These competitors may have more
bargaining power in negotiations than NatWest Group, and therefore may be in a
position to extract more advantageous terms than NatWest Group. Refer to
'NatWest Group operates in markets that are highly competitive, with
competitive pressures and technology disruption'.

NatWest Group may pursue these transactions and initiatives to, amongst
others: (i) enhance capabilities that may lead to better productivity or cost
efficiencies; (ii) acquire talent; (iii) pursue new products or expand
existing products; and/or (iv) enter new markets or enhance its presence in
existing markets. In pursuing its strategy, NatWest Group may not fully
realise the expected benefits and value from the above-mentioned transactions
and initiatives in the time, or to the degree, anticipated, or at all.

In particular, NatWest Group may: (i) fail to realise the business rationale
for the transaction or initiative, or rely on assumptions underlying the
business plans supporting the valuation of a target transaction or initiative
that may prove inaccurate (for example, regarding synergies and expected
commercial demand); (ii) fail to successfully integrate any acquired
businesses, investment, joint-venture or assets (including in respect of
technologies, existing strategies, products, governance, systems and controls,
and human capital) or to successfully divest or restructure a business; (iii)
fail to retain key employees, customers and suppliers of any acquired or
restructured business; (iv) be required or wish to terminate pre-existing
contractual relationships, which could prove costly and/or be executed on
unfavourable terms and conditions; (v) fail to discover certain contingent or
undisclosed liabilities in businesses that it acquires, or its due diligence
to discover any such liabilities may be inadequate; and (vi) not obtain
necessary regulatory and other approvals or onerous conditions may be attached
to such approvals. Accordingly, NatWest Group may not be successful in
achieving its strategy and any particular transaction may not succeed, may be
limited in scope or scale and may not conclude on the terms contemplated, or
at all.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

The transfer of NatWest Group's Western European corporate portfolio involves
certain risks.

To improve efficiencies and best serve customers following the UK's withdrawal
from the EU, certain assets, liabilities, transactions and activities of
NatWest Group (including its Western European corporate portfolio principally
consisting of term funding and revolving credit facilities), are expected to
be: (i) transferred from the ring-fenced subgroup of NatWest Group to NWM
Group and/or (ii) transferred to the ring-fenced subgroup of NatWest Group
from NWM Group, subject to regulatory and customer requirements. The timing,
success and quantum of any of these transfers remain uncertain as is the
impact of these transactions on its results of operations.

As a result, this may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.    

Financial resilience risk

NatWest Group may not achieve its ambitions or targets, meet its guidance, or
be in a position to continue to make discretionary capital distributions
(including dividends to shareholders).

NatWest Group has set a number of financial, capital and operational targets
and provided guidance including in respect of its: CET1 ratio target, return
on tangible equity (RoTE), total income, other operating expenses, loan
impairment rate, RWAs, ordinary dividends, funding plans and requirements,
employee engagement, diversity and inclusion as well as climate-related
targets (including its climate and sustainable funding and financing targets)
and customer satisfaction targets and discretionary capital distributions
(including dividends to shareholders). Refer to 'The implementation and
execution of NatWest Group's strategy carries execution and operational risks
and it may not achieve its stated aims and targeted outcomes.'

NatWest Group's ability to meet its ambitions, targets, guidance, and make
discretionary capital distributions is subject to various internal and
external factors, risks and uncertainties. These include but are not limited
to: UK and global macroeconomic, political, market and regulatory
uncertainties, customer behaviour, operational risks and risks relating to
NatWest Group's business model and strategy (including risks associated with
climate and other sustainability-related issues), competitive pressures, and
litigation, governmental actions, investigations and regulatory matters. If
assumptions, judgements and estimates (for example about future economic
conditions) prove to be incorrect, NatWest Group may not achieve any or all of
its ambitions or targets, or meet its guidance.

In addition, as NatWest Group plc is a non-operating holding company, its
source of income is from its operating subsidiaries that hold the principal
assets and operations of NatWest Group and its ability to continue to make
capital distributions (including dividends to shareholders) is therefore
subject to such subsidiaries' financial performance, and their respective
ability to make capital distributions directly or indirectly to NatWest Group
plc which, in certain cases, could also be restricted by applicable laws,
regulations and other requirements. Refer to 'NatWest Group, its customers and
its counterparties face continued economic and political risks and
uncertainties in the UK and global markets, including as a result of inflation
and interest rates, supply chain disruption and geopolitical developments.'

Any failure of NatWest Group to achieve ambitions or target, meet its
guidance, or make discretionary capital distributions may have a material
adverse effect on NatWest Group's future results, financial condition,
prospects, and/or reputation.

NatWest Group operates in markets that are highly competitive, with
competitive pressures and technology disruption.

NatWest Group faces increasing competitive pressures and technology disruption
from incumbent traditional UK banks, challenger banks and building societies
(including those resulting from mergers between these entities), fintech
companies, large technology conglomerates and new market entrants who could
look to scale technology and/or other competitive advantages to compete with
NatWest Group for customer engagement. "BigTech" companies are seen as threats
to incumbent banking providers because of their customer innovation and global
reach. In addition, digital-first banks (often referred to as "neobanks") and
fintechs are aiming to compete with incumbent banking providers on the basis
that customers increasingly use a constellation of providers to support their
complex and evolving needs (e.g., personal financial management and paying for
goods and services in foreign currency).

NatWest Group expects competition to continue and intensify in response to
various trends including: evolving customer behaviour, technological changes
(including digital currencies, stablecoins and the growth of digital banking),
competitor behaviour, new market entrants, competitive foreign exchange
offerings, industry trends resulting in increased disaggregation or unbundling
of financial services or, conversely, the re-intermediation of traditional
banking services, and the impact of regulatory actions, among others. In
particular, NatWest Group may be unable to grow or retain its market share due
to new (or more competitive) banking, lending and payment products and
services that are offered by rapidly evolving incumbents and challengers
(including shadow banks, alternative or direct lenders and new entrants).

These competitive pressures and the introduction of disruptive technology may
result in a shift in customer behaviour and impact NatWest Group's revenues
and profitability, particularly in its key UK retail and Commercial &
Institutional banking segments. Moreover, innovations in biometrics,
artificial intelligence, automation, cloud services, blockchain,
cryptocurrencies and quantum computing may rapidly facilitate industry
transformation.

Increasingly, many of NatWest Group's products and services are, and will
become, more technology intensive, including through digitalisation,
automation, and the use of artificial intelligence while needing to continue
complying with applicable and evolving regulations. NatWest Group's ability to
develop or acquire digital solutions and their integration into NatWest
Group's structures, systems and controls has become increasingly important for
retaining and growing NatWest Group's market share and customer-facing
businesses. NatWest Group's innovation strategy, which includes investing in
its IT capability to address increasing customer and merchant use of online
and mobile banking technology, as well as selective acquisitions (such as
fintech ventures, including Mettle, Rooster Money, Boxed and Cushon), may not
be successful or may not result in NatWest Group offering innovative products
and services in the future.

Furthermore, current or future competitors may be more successful than NatWest
Group in implementing technologies for delivering products or services to
their customers, which may adversely affect its competitive position. In
addition, continued consolidation and/or technological developments in the
financial services industry could result in the emergence of new competitors
or NatWest Group's competitors gaining greater capital and other resources,
including the ability to offer a broader, more attractive and/or better value
range of products and services and geographic diversity. For example, new
market entrants, including non-traditional financial services providers, such
as retail or technology conglomerates, may have competitive advantages in
scale, technology and customer engagement and may be able to develop and
deliver financial services at a lower cost base.

NatWest Group may also fail to identify future opportunities, or fail to
derive benefits from technological innovation, changing customer behaviour and
changing regulatory demands. Competitors may be better able to attract and
retain customers and key employees, have more effective IT systems, have
access to lower cost funding and/or be able to attract deposits on more
favourable terms than NatWest Group. Although NatWest Group invests in new
technologies and participates in industry and research-led technology
development initiatives, such investments may be insufficient or ineffective,
especially given NatWest Group's focus on business simplification and cost
efficiencies. This could affect NatWest Group's ability to offer innovative
products or technologies to customers.

If NatWest Group is unable to offer competitive, attractive and innovative
products that are also profitable and released in a timely manner; it will
lose market share, incur losses on some or all of its initiatives and possibly
lose growth opportunities. For example, NatWest Group is investing in the
automation of certain solutions and interactions within its customer-facing
businesses, including through artificial intelligence. There can be no
certainty that such initiatives will allow NatWest Group to compete
effectively or will deliver the expected cost savings.

In addition, the implementation of NatWest Group's strategy, delivery on its
climate ambition and cost-controlling measures, may also have an impact on its
ability to compete effectively and maintain satisfactory returns. Moreover,
activist investors have increasingly become engaged and interventionist in
recent years, which may pose a threat to NatWest Group's strategic
initiatives.

Some of these trends have been catalysed by various regulatory and competition
policy interventions, including the UK initiative on Open Banking, 'Open
Finance' and other remedies imposed by the Competition and Markets Authority
('CMA'), which are designed to further promote competition within the
financial sector.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group has significant exposure to counterparty and borrower risk
including credit losses, which may have an adverse effect on NatWest Group.

NatWest Group has exposure to many different sectors, customers and
counterparties, and risks arising from actual or perceived changes in credit
quality and the recoverability of monies due from borrowers and other
counterparties are inherent in a wide range of NatWest Group's businesses.
NatWest Group's lending strategy and associated processes and systems may fail
to identify, anticipate or quickly react to weaknesses or risks in a
particular sector, market, borrower or counterparty, or NatWest Group's credit
risk appetite relative to competitors, or fail to appropriately value physical
or financial collateral. This may result in increased default rates or a
higher loss given default for loans, which may, in turn, impact NatWest
Group's profitability. Refer to 'Risk and capital management - Credit Risk'.

The credit quality of NatWest Group's borrowers and other counterparties may
be affected by UK and global macroeconomic and political uncertainties, as
well as prevailing economic and market conditions. Refer to 'NatWest Group,
its customers and its counterparties face continued economic and political
risks and uncertainties in the UK and global markets, including as a result of
inflation and interest rates, supply chain disruption, and geopolitical
developments'. Any further deterioration in these conditions or changes to
legal or regulatory landscapes could worsen borrower and counterparty credit
quality or impact the enforcement of contractual rights, increasing credit
risk. Any increase in drawings upon committed credit facilities may also
increase NatWest Group's RWAs. In addition, the level of household
indebtedness (on a per capita basis) in the UK remains high. The ability of
households and businesses to service their debts could be worsened by a period
of high unemployment, or high interest rates or inflation, particularly if
prolonged.

NatWest Group may be affected by volatility in property prices (including as a
result of UK political or economic conditions) given that NatWest Group's
mortgage loan portfolio as at 31 December 2024 amounted to £209.8 billion,
representing 51% of NatWest Group's total loan exposure. If property prices in
the UK were to weaken this could lead to higher impairment charges,
particularly if default rates also increase. In addition, NatWest Group's
credit risk may be exacerbated if the collateral that it holds cannot be
realised as a result of market conditions, regulatory intervention, or other
applicable laws, or if it is liquidated at prices not sufficient to recover
the net amount outstanding to NatWest Group after accounting for any IFRS 9
provisions already made. This is most likely to occur during periods of
illiquidity or depressed asset valuations.

NatWest Group is exposed to the financial sector, including sovereign debt
securities, financial institutions, financial intermediation providers
(including providing facilities to financial sponsors and funds, backed by
assets or investor commitments) and securitised products (typically senior
lending to special purpose vehicles backed by pools of financial assets).
Concerns about, or a default by, a financial institution or intermediary could
lead to significant liquidity problems and losses or defaults by other
financial institutions or intermediaries, since the commercial and financial
soundness of many financial institutions and intermediaries is closely related
and interdependent as a result of credit, trading, clearing and other
relationships. Any perceived lack of creditworthiness of a counterparty or
borrower may lead to market-wide liquidity problems and losses for NatWest
Group. In addition, the value of collateral may be correlated with the
probability of default by the relevant counterparty ('wrong way risk'), which
would increase NatWest Group's potential loss. Any of the above risks may also
adversely affect financial intermediaries, such as clearing agencies, clearing
houses, banks, securities firms and exchanges with which NatWest Group
interacts on a regular basis. Refer to 'NatWest Group may not meet the
prudential regulatory requirements for liquidity and funding or may not be
able to adequately access sources of liquidity and funding, which could
trigger the execution of certain management actions or recovery options.'

As a result, adverse changes in borrower and counterparty credit risk may
cause additional impairment charges under IFRS 9, increased repurchase
demands, higher costs, additional write-downs and losses for NatWest Group and
an inability to engage in routine funding transactions. If NatWest Group
experiences losses and a reduction in profitability, this is likely to affect
the recoverable value of fixed assets, including goodwill and deferred taxes,
which may lead to write-downs.

NatWest Group has applied an internal analysis of multiple economic scenarios
(MES) together with the determination of specific overlay adjustments to
inform its IFRS 9 ECL (Expected Credit Loss). The recognition and measurement
of ECL is complex and involves the use of significant judgement and
estimation.

This includes the formulation and incorporation of multiple forward-looking
economic scenarios into ECL to meet the measurement objective of IFRS 9. The
ECL provision is sensitive to the model inputs and economic assumptions
underlying the estimate. Going forward, NatWest Group anticipates observable
credit deterioration of a proportion of assets resulting in a systematic
uplift in defaults, which is mitigated by those economic assumption scenarios
being reflected in the Stage 2 ECL across portfolios, along with a combination
of post model overlays in both wholesale and retail portfolios reflecting the
uncertainty of credit outcomes. Refer to 'Risk and capital management - Credit
Risk'. A credit deterioration would also lead to RWA increases. Furthermore,
the assumptions and judgements used in the MES and ECL assessment at 31
December 2024 may not prove to be adequate resulting in incremental ECL
provisions for NatWest Group.

As NatWest Group has exposure to the financial industry, it also has exposure
to shadow banking entities (i.e. entities which carry out activities of a
similar nature to banks but without the same regulatory oversight). As a
result, NatWest Group is required to identify and monitor its exposure to
shadow banking entities, implement and maintain an internal framework for the
identification, management, control and mitigation of the risks associated
with exposure to shadow banking entities, and ensure effective reporting and
governance in respect of such exposure. If NatWest Group is unable to properly
identify and monitor its shadow banking exposure, maintain an adequate
framework, and/or ensure effective reporting and governance in respect of
shadow banking exposure, this may adversely affect NatWest Group.

In line with certain mandated COVID-19 pandemic support schemes, NatWest Group
assisted customers with a number of initiatives including NatWest Group's
participation in the Bounce Back Loan Scheme ('BBLS'), the Coronavirus
Business Interruption Loan Scheme ('CBILS') and the Coronavirus Large Business
Interruption Loan Scheme ('CLBILS') products. NatWest Group sought to manage
the risks of fraud and money laundering against the need for the fast and
efficient release of funds to customers and businesses. NatWest Group may be
exposed to fraud, conduct and litigation risks arising from inappropriate
approval (or denial) of BBLS, CBILS or CLBILS or the enforcing or pursuing
repayment of BBLS, CBILS and CLBILS (or a failure to exercise forbearance),
which may have an adverse effect on NatWest Group's reputation and results of
operations. The implementation of the initiatives and efforts mentioned above
may result in litigation, regulatory and government actions and proceedings.
These actions may result in judgements, settlements, penalties, fines, or
removal of recourse to the government guarantee provided under those schemes
for impacted loans.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group may not meet the prudential regulatory requirements for
liquidity and funding or may not be able to adequately access sources of
liquidity and funding, which could trigger the execution of certain management
actions or recovery options.

Liquidity and the ability to raise funds continues to be a key area of focus
for NatWest Group and the industry as a whole. NatWest Group is required by
regulators in the UK, the EU and other jurisdictions in which it undertakes
regulated activities to maintain adequate liquidity and funding resources. To
satisfy its liquidity and funding requirements, NatWest Group may therefore
access sources of liquidity and funding through retail and wholesale deposits,
as well as through the debt capital markets. As at 31 December 2024, NatWest
Group plc subsidiaries held £464.9 billion in deposits from banks and
customers.

The level of deposits of NatWest Group may fluctuate due to factors outside of
its control, such as a loss of customers, loss of customer and/or investor
confidence (including in individual NatWest Group entities or as a result of
volatility in the financial industry), changes in customer behaviour, changes
in interest rates, government support, increasing competitive pressures for
retail and corporate customer deposits or the reduction or cessation of
deposits by wholesale depositors, which could result in a significant outflow
of deposits within a short period of time. An inability to grow or any
material decrease in NatWest Group's deposits could, particularly if
accompanied by one or more of the other factors mentioned above, adversely
affect NatWest Group's ability to satisfy its liquidity or funding needs, or
comply with its related regulatory requirements. In turn, this could require
NatWest Group to adapt its funding plans or change its operations.

Macroeconomic developments, political uncertainty, changes in interest rates,
and market volatility could affect NatWest Group's ability to access sources
of liquidity and funding on satisfactory terms, or at all. This may result in
higher funding costs and failure to comply with regulatory capital, funding
and leverage requirements.

As a result, NatWest Group and its subsidiaries could be required to change
their funding plans. This could exacerbate funding and liquidity risk, which
may adversely affect NatWest Group.

As at 31 December 2024, NatWest Group plc's liquidity coverage ratio was 150%
and net stable funding ratio was 137%. If its liquidity position and/or
funding were to come under stress, and if NatWest Group were unable to raise
funds through deposits, in the debt capital markets or through other reliable
funding sources, on acceptable terms, or at all, its liquidity position would
likely be adversely affected and it might be unable to meet deposit
withdrawals on demand or at their contractual maturity, to repay borrowings as
they mature, to meet its obligations under committed financing facilities, to
comply with regulatory funding requirements, to undertake certain capital
and/or debt management activities, and/or to fund new loans, investments and
businesses or make capital distributions to its shareholders.

If, under a stress scenario, the level of liquidity falls outside of NatWest
Group's risk appetite, there are a range of recovery management actions that
NatWest Group could take to manage its liquidity levels, but any such actions
may not be sufficient to restore adequate liquidity levels and the related
implementation may have adverse consequences for NatWest Group's operations.
Under the PRA Rulebook, NatWest Group must maintain a recovery plan acceptable
to its regulator, such that a breach of NatWest Group's applicable liquidity
requirements may trigger the application of NatWest Group's recovery plan to
attempt to remediate a deficient liquidity position. NatWest Group may need to
liquidate assets to meet its liabilities, including disposals of assets not
previously identified for disposal to reduce its funding commitments or
trigger the execution of certain management actions or recovery options. In a
time of reduced liquidity, NatWest Group may be unable to sell its assets, at
attractive prices, or at all, which may adversely affect NatWest Group's
liquidity.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group may not meet the prudential regulatory requirements for
regulatory capital and MREL, or manage its capital effectively, which could
trigger the execution of certain management actions or recovery options.

NatWest Group is required by regulators in the UK, the EU and other
jurisdictions in which it undertakes regulated activities to maintain adequate
financial resources. Adequate levels of capital provide NatWest Group with
financial flexibility specifically in its core UK operations in the face of
turbulence and uncertainty in the UK and the global economy. Adequate levels
of capital also enable NatWest Group plc to make discretionary capital
distributions (including dividends to shareholders) and undertake buybacks of
its shares.

As at 31 December 2024, NatWest Group plc's CET1 ratio was 13.6% and is
targeting a CET1 ratio in the range of 13-14% by 31 December 2025. NatWest
Group plc's target CET1 ratio is based on a combination of its views on the
appropriate level of capital and its actual and expected regulatory
requirements and internal modelling, including stress scenarios and
management's and/or the Prudential Regulation Authority's (PRA) views on
appropriate buffers above minimum required operating levels. NatWest Group
plc's current capital strategy is based on the expected accumulation of
additional capital through the accrual of retained earnings over time, planned
capital actions (including issuances, redemptions, and discretionary capital
distributions), RWA growth in the form of regulatory uplifts and lending
growth and other capital management initiatives which focus on improving
capital efficiency and ensuring NatWest Group meets its medium-to-long term
targets. NatWest Group intends to make capital distributions to its equity
investors of certain amounts surplus to its publicly stated CET1 ratio target
of 13-14%, subject to macroeconomic conditions and regulatory approval, via a
combination of dividends and buybacks. In making dividends distribution and
buyback decisions, consideration is given to previously guided ordinary
dividend pay-out ratios, an intention to continue to help reduce HM Treasury's
stake in NatWest Group, and maximising shareholder value.

A number of factors may impact NatWest Group plc's ability to maintain its
CET1 ratio target and achieve its capital strategy. These include:

-      a depletion of its capital resources through increased costs or
liabilities or reduced profits (for example, due to an increase in provisions
due to a deterioration in UK economic conditions);

-      an increase in the quantum of RWAs/leverage exposure in excess of
that expected, including due to regulatory changes (including their
interpretation or application), or a failure in internal controls or
procedures to accurately measure and report RWAs/leverage exposure;

-      changes in prudential regulatory requirements including NatWest
Group plc's total capital requirement/leverage requirement set by the PRA,
including Pillar 2 requirements, as applicable, and regulatory buffers as well
as any applicable scalars;

-      reduced upstreaming of dividends from NatWest Group plc's
subsidiaries because of changes in their financial performance and/or the
extent to which local capital requirements exceed NatWest Group plc's target
ratio; and

-      limitations on the use of double leverage (i.e., NatWest Group
plc's use of debt to invest in the equity of its subsidiaries, as a result of
the BoE's and/or NatWest Group's evolving views on distribution of capital
within groups).

A shortage or reduction of capital could in turn affect NatWest Group plc's
capital ratio, and/or its ability to make capital distributions and in turn
NatWest Group may not remain a viable, competitive or profitable banking
business.

A minimum level of capital is required to be met by NatWest Group plc for it
to be entitled to make certain discretionary payments, and institutions such
as NatWest Group plc which fail to meet the regulatory combined buffer
requirement are subject to restricted discretionary payments.

The resulting restrictions are scaled according to the extent of the breach of
the combined buffer requirement and calculated as a percentage of the profits
of the institution since the last distribution of profits or discretionary
payment which gives rise to a maximum distributable amount (MDA) (if any) that
the financial institution can distribute through discretionary payments. Any
breach of the combined buffer requirement may necessitate for NatWest Group
plc reducing or ceasing discretionary payments to shareholders (including
payments of dividends) and buybacks depending on the extent of the breach.

NatWest Group plc is required to meet an external MREL equivalent to the
higher of: (i) two times the sum of Pillar 1 and Pillar 2A, or (ii) if subject
to a leverage ratio requirement, two times the applicable requirement. The BoE
has identified a "single point-of-entry" at NatWest Group plc, as the
preferred resolution strategy for NatWest Group. As a result, NatWest Group
plc is the only entity within NatWest Group that can externally issue
securities that count towards its MREL requirements, the proceeds of which can
then be downstreamed to meet the internal MREL of its operating entities and
intermediate holding companies.

If NatWest Group plc is unable to raise or retain the requisite amount of
regulatory capital or MREL, downstream the proceeds of MREL to subsidiaries as
required, or to otherwise meet its regulatory capital, MREL and leverage
requirements, it may be exposed to increased regulatory supervision or
sanctions, loss of customer and/or investor confidence, constrained or more
expensive funding and be unable to make discretionary payments on capital
instruments.

If, under a stress scenario, the level of regulatory capital or MREL falls
outside of NatWest Group's risk appetite, there are a range of recovery
management actions (focused on risk reduction and mitigation) that NatWest
Group could seek to take to manage its capital levels, but any such actions
may not be sufficient to restore adequate capital levels. Under the PRA
Rulebook, NatWest Group must maintain a recovery plan acceptable to its
regulator, such that a breach of NatWest Group's applicable capital or
leverage requirements may trigger the application of NatWest Group's recovery
plan to remediate a deficient capital position.

NatWest Group's regulator may request that NatWest Group carry out certain
capital management actions or, if NatWest Group plc's CET1 ratio falls below
7%, certain regulatory capital instruments issued by NatWest Group plc will be
written-down or converted into equity, and there may be an issue of additional
equity by NatWest Group plc, which could result in the reduction in value of
the holdings of NatWest Group plc's existing shareholders. The success of such
issuances will also be dependent on favourable market conditions and NatWest
Group may not be able to raise the amount of capital required on acceptable
terms, or at all.

Separately, NatWest Group may address a shortage of capital by taking action
to reduce leverage exposure and/or RWAs via asset or business disposals. These
actions may, in turn, affect: NatWest Group's product offering, credit
ratings, ability to operate its businesses, pursue its strategy and strategic
opportunities, any of which may adversely affect NatWest Group. Refer to
'NatWest Group may become subject to the application of UK statutory
stabilisation or resolution powers which may result in, for example, the
cancellation, transfer or dilution of ordinary shares, or the write-down or
conversion of certain other of NatWest Group's securities.'; and 'NatWest
Group may be adversely affected if it fails to meet the requirements of
regulatory stress tests.'

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

Any reduction in the credit rating and/or outlooks assigned to NatWest Group
plc, any of its subsidiaries or any of their respective debt securities could
adversely affect the availability of funding for NatWest Group, reduce NatWest
Group's liquidity and funding position and increase the cost of funding.

Rating agencies regularly review NatWest Group plc and other NatWest Group
entities' credit ratings and outlooks. NatWest Group entities' credit ratings
and outlooks could be negatively affected (directly and indirectly) by a
number of factors that can change over time, including, without limitation:
credit rating agencies' assessment of NatWest Group's strategy and
management's capability; its financial condition including in respect of
profitability, asset quality, capital, funding and liquidity, and risk
management practices; the level of political support for the sectors and
regions in which NatWest Group operates; the legal and regulatory frameworks
applicable to NatWest Group's legal structure; business activities and the
rights of its creditors; changes in rating methodologies; changes in the
relative size of the loss-absorbing buffers protecting bondholders and
depositors; the competitive environment; political, geopolitical and economic
conditions in NatWest Group's key markets (including inflation and interest
rates, supply chain disruptions and geopolitical developments); any reduction
of the UK's sovereign credit rating and market uncertainty. In addition,
credit rating agencies are increasingly taking into account
sustainability-related factors, including climate, environmental, social and
governance related risk, as part of the credit rating analysis, as are
investors in their investment decisions.

Any reductions in the credit ratings of NatWest Group plc or of certain other
NatWest Group entities could significantly affect NatWest Group. Adverse
consequences for NatWest Group from downgrades could include, without
limitation, a reduction in the access to capital markets or in the size of its
deposit base, and trigger additional collateral or other requirements in its
funding arrangements or the need to amend such arrangements, which could
adversely affect NatWest Group's liquidity and funding position, cost of
funding and could limit the range of counterparties willing to enter into
transactions with NatWest Group on favourable terms, or at all. This may in
turn adversely affect NatWest Group's competitive position and threaten its
prospects.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group may be adversely affected if it fails to meet the requirements
of regulatory stress tests.

NatWest Group entities are subject to annual and other stress tests by their
respective regulators in the UK and EU.

Stress tests are designed to assess the resilience of banks such as NatWest
Group to potential adverse economic or financial developments and ensure that
they have robust, forward-looking capital planning processes that account for
the risks associated with their business profile. If the stress tests reveal
that a bank's existing regulatory capital buffers are not sufficient to absorb
the impact of the stress, then it is possible that NatWest Group may need to
take action to strengthen its capital position.

Failure by NatWest Group to meet the quantitative and qualitative requirements
of the stress tests as set forth by its UK regulator may result in: NatWest
Group's regulators requiring NatWest Group to generate additional capital,
reputational damage, increased supervision and/or regulatory sanctions,
restrictions on capital distributions and loss of investor confidence, all of
which may adversely affect NatWest Group.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group could incur losses or be required to maintain higher levels of
capital as a result of limitations or failure of various models.

Given the complexity of NatWest Group's business, strategy and capital
requirements, NatWest Group relies on models for a wide range of purposes,
including to manage its business, assess the value of its assets and its risk
exposure, as well as to anticipate capital and funding requirements (including
to facilitate NatWest Group's mandated stress testing). In addition, NatWest
Group utilises models for valuations, credit approvals, calculation of loan
impairment charges on an IFRS 9 basis, financial reporting and to help address
financial crime (criminal activities in the form of money laundering,
terrorist financing, bribery and corruption, tax evasion and sanctions as well
as external or internal fraud (collectively, 'financial crime')). NatWest
Group's models, and the parameters and assumptions on which they are based,
are periodically reviewed.

Model outputs are inherently uncertain, because they are imperfect
representations of real-world phenomena, are simplifications of complex
real-world systems and processes, and are based on a limited set of
observations. NatWest Group may face adverse consequences as a result of
actions or decisions based on models that are poorly developed, incorrectly
implemented, non-compliant, outdated or used inappropriately. This includes
models that are based on inaccurate or non-representative data (for example,
where there have been changes in the micro or macroeconomic environment in
which NatWest Group operates) or as a result of the modelled outcome being
misunderstood, or used for purposes for which it was not designed. This could
result in findings of deficiencies by NatWest Group's regulators (including as
part of NatWest Group's mandated stress testing), increased capital
requirements, may render some business lines uneconomical, may require
management action or may subject NatWest Group to regulatory sanction, any of
which in turn may also have an adverse effect on NatWest Group and its
customers.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group's financial statements are sensitive to underlying accounting
policies, judgements, estimates and assumptions.

The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of
assets, liabilities, income, expenses, exposures and RWAs. While estimates,
judgements and assumptions take into account historical experience and other
factors (including market practice and expectations of future events that are
believed to be reasonable under the circumstances), actual results may differ
due to the inherent uncertainty in making estimates, judgements and
assumptions (particularly those involving the use of complex models).

Further, accounting policy and financial statement reporting requirements
increasingly require management to adjust existing judgements, estimates and
assumptions for the effects of climate-related, sustainability and other
matters that are inherently uncertain and for which there is little historical
experience which may affect the comparability of NatWest Group's future
financial results with its historical results. Actual results may differ due
to the inherent uncertainty in making climate-related and sustainability
estimates, judgements and assumptions.

Accounting policies deemed critical to NatWest Group's results and financial
position, based upon materiality and significant judgements and estimates,
involve a high degree of uncertainty and may have a material impact on its
results. For 2024, these include loan impairments, fair value, and deferred
tax. These are set out in 'Critical accounting policies and sources of
estimation uncertainty'.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

Changes in accounting standards may materially impact NatWest Group's
financial results.

NatWest Group prepares its consolidated financial statements in conformity
with the requirements of the Companies Act 2006 and in accordance with IFRS as
issued by the International Accounting Standards Board. Changes in accounting
standards or guidance by accounting bodies or in the timing of their
implementation, whether immediate or foreseeable, could result in NatWest
Group having to recognise additional liabilities on its balance sheet, or in
further write-downs or impairments to its assets and could also have a
material adverse effect on NatWest Group. From time to time, the International
Accounting Standards Board may issue new accounting standards or
interpretations that could materially impact how NatWest Group calculates,
reports and discloses its financial results and financial condition, and which
may affect NatWest Group capital ratios, including the CET1 ratio and the
required levels of regulatory capital. New accounting standards and
interpretations that have been issued by the International Accounting
Standards Board but which have not yet been adopted by NatWest Group are
discussed in 'Future accounting developments'.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

The value or effectiveness of any credit protection that NatWest Group has
purchased depends on the value of the underlying assets and the financial
condition of the insurers and counterparties.

NatWest Group has credit exposure arising from over-the-counter derivative
contracts, mainly credit default swaps (CDSs), and other credit derivatives,
each of which are carried at fair value. The fair value of these CDSs, as well
as NatWest Group's exposure to the risk of default by the underlying
counterparties, depends on the valuation and the perceived credit risk of the
instrument against which protection has been bought. Many market
counterparties have been adversely affected by their exposure to residential
mortgage-linked and corporate credit products, whether synthetic or otherwise,
and their actual and perceived creditworthiness may deteriorate rapidly. If
the financial condition of these counterparties or their actual or perceived
creditworthiness deteriorates, NatWest Group may record further credit
valuation adjustments on the credit protection bought from these
counterparties under the CDSs. NatWest Group also recognises any fluctuations
in the fair value of other credit derivatives.

Any such adjustments or fair value changes may have a material adverse effect
on NatWest Group's future results, financial condition, prospects, and/or
reputation.

NatWest Group is subject to regulatory oversight in respect of resolution, and
NatWest Group could be adversely affected should the BoE in the future deem
NatWest Group's preparations to be inadequate.

NatWest Group is subject to regulatory oversight by the BoE and the PRA and is
required under the PRA rulebook to carry out an assessment of its preparations
for resolution, submit a report of the assessment to the PRA, and disclose a
summary of this report. NatWest Group has dedicated significant resources
towards the preparation of NatWest Group for a potential resolution scenario.

In August 2024, the BoE communicated its assessment of NatWest Group's
preparations and did not identify any areas for further enhancement,
shortcomings, deficiencies or substantive impediments. NatWest Group could be
adversely affected should future BoE assessments deem NatWest Group's
preparations to be inadequate. If future BoE assessments identify any areas
for further enhancement, shortcomings, deficiencies or substantive impediments
in NatWest Group's ability to achieve the resolvability outcomes or reveal
that NatWest Group is not adequately prepared to be resolved, or does not have
adequate plans in place to meet resolvability requirements, NatWest Group may
be required to take action to enhance its preparations to be resolvable,
resulting in additional costs and the dedication of additional resources. Such
a scenario may have an impact on NatWest Group as, depending on the BoE's
assessment, potential action may include, but is not limited to, restrictions
on NatWest Group's maximum individual and aggregate exposures, a requirement
to dispose of specified assets, a requirement to change its legal or
operational structure, a requirement to cease carrying out certain activities,
a requirement not to make discretionary distributions or undertake NatWest
Group's shares buybacks, and/or a requirement to maintain a specified amount
of MREL. This may also impact NatWest Group's strategic plans.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation, or lead to a loss
of investor confidence.

NatWest Group may become subject to the application of UK statutory
stabilisation or resolution powers which may result in, for example, the
cancellation, transfer or dilution of ordinary shares, or the write-down or
conversion of certain other of NatWest Group's securities.

The BoE, the PRA, the FCA, and HM Treasury (together, the 'Authorities') are
granted substantial powers to resolve and stabilise UK-incorporated financial
institutions. Five stabilisation options exist: (i) transfer of all of the
business of a relevant entity or the shares of the relevant entity to a
private sector purchaser; (ii) transfer of all or part of the business of the
relevant entity to a 'bridge bank' wholly or partially owned by the BoE; (iii)
transfer of part of the assets, rights or liabilities of the relevant entity
to one or more asset management vehicles for management of the transferor's
assets, rights or liabilities; (iv) the write-down, conversion, transfer,
modification, or suspension of the relevant entity's equity, capital
instruments and liabilities; and (v) temporary public ownership of the
relevant entity. These options may be applied to NatWest Group plc as the
parent company or to any subsidiary where certain conditions are met (such as,
whether the firm is failing or likely to fail, or whether it is reasonably
likely that action will be taken (outside of resolution) that will result in
the firm no longer failing or being likely to fail). Moreover, there are
modified insolvency and administration procedures for relevant entities within
NatWest Group, and the Authorities have the power to modify or override
certain contractual arrangements in certain circumstances and amend the law
for the purpose of enabling their powers to be used effectively and may
promulgate provisions with retrospective applicability.

Under the UK Banking Act 2009, the Authorities are generally required to have
regard to specified objectives in exercising the powers provided for by the UK
Banking Act 2009. One of the objectives (which is required to be balanced as
appropriate with the other specified objectives) refers to the protection and
enhancement of the stability of the financial system of the UK. Moreover, the
'no creditor worse off' safeguard provides that where certain resolution
actions are taken, the Authorities are required to ensure that no creditor is
in a worse position than if the bank had entered into normal insolvency
proceedings. Although, this safeguard may not apply in relation to an
application of the separate write-down and conversion power relating to
capital instruments in circumstances where a stabilisation power is not also
used, the UK Banking Act 2009 still requires the Authorities to respect the
hierarchy on insolvency when using the write-down and conversion power.
Further, holders of debt instruments which are subject to the power may,
however, have ordinary shares transferred to or issued to them by way of
compensation.

Uncertainty exists as to how the Authorities may exercise their powers
including the determination of actions to be undertaken in relation to the
ordinary shares and other securities issued by NatWest Group, which may depend
on factors outside of NatWest Group's control. Moreover, the UK Banking Act
2009 provisions remain largely untested in practice, particularly in respect
of resolutions of large financial institutions and groups.

If NatWest Group is at or is approaching the point such that regulatory
intervention is required, any exercise of the resolution regime powers by the
Authorities may adversely affect holders of NatWest Group plc's ordinary
shares or other NatWest Group securities. This may result in various actions
being undertaken in relation to NatWest Group and any securities of NatWest
Group, including cancellation, transfer, dilution, write-down or conversion
(as applicable). There may also be a corresponding adverse effect on the
market price of such ordinary shares and other NatWest Group securities.

Each of these actions may also have a material adverse effect on NatWest
Group's future results, financial condition, prospects, and/or reputation.

Operational and IT resilience risk

Operational risks (including reliance on third party suppliers and outsourcing
of certain activities) are inherent in NatWest Group's businesses.

Operational risk is the risk of loss or disruption resulting from inadequate
or failed internal processes, procedures, people or systems, or from external
events, including legal and regulatory risks, third party processes,
procedures, people or systems.

NatWest Group operates in several countries, offering a diverse range of
products and services supported directly or indirectly by third party
suppliers. As a result, operational risks or losses can arise from a number of
internal or external factors (including for example, payment errors or
financial crime and fraud), for which there is continued scrutiny by third
parties of NatWest Group's compliance with financial crime requirements; refer
to, 'NatWest Group is exposed to the risks of various litigation matters,
regulatory and governmental actions and investigations as well as remedial
undertakings, the outcomes of which are inherently difficult to predict, and
which could have an adverse effect on NatWest Group.' These risks are also
present when NatWest Group relies on critical service providers (suppliers) or
vendors to provide services to it or its customers, as is increasingly the
case as NatWest Group outsources certain activities, including with respect to
the implementation of technologies, innovation (such as cloud services and
artificial intelligence) and responding to regulatory and market changes.

Operational risks also exist due to the implementation of NatWest Group's
strategy, and the organisational and operational changes involved, including:
NatWest Group's cost-controlling and simplification measures; continued
digitalisation and the integration of artificial intelligence in the business;
acquisition, divestments and other transactions; the implementation of
recommendations from internal and external reviews with respect to certain
governance processes, policies, systems and controls of NatWest Group entities
including with respect to customer account closures; and conditions affecting
the financial services industry generally (including macroeconomic and other
geopolitical developments) as well as the legal and regulatory uncertainty
resulting from these conditions. Any of the above may place significant
pressure on NatWest Group's ability to maintain effective internal controls
and governance frameworks.

NatWest Group also faces operational risks as it continues to invest in the
automation of certain solutions and customer interactions, including through
artificial intelligence. Such initiatives may result in operational,
reputational and conduct risks if the technology is not used appropriately, is
defective or inadequate, or is not fully integrated into NatWest Group's
current solutions, systems and controls.

The effective management of operational risks is critical to meeting customer
service expectations and retaining and attracting customer business. Although
NatWest Group has implemented risk controls and mitigation actions, with
resources and planning having been devoted to mitigate operational risk, such
measures may not be effective in controlling each of the operational risks
faced by NatWest Group.

Ineffective management of such risks may have a material adverse effect on
NatWest Group's future results, financial condition, prospects, and/or
reputation.

NatWest Group is subject to sophisticated and frequent cyberattacks, and
compliance with cybersecurity and data protection regulations is becoming
increasingly complex.

NatWest Group experiences a constant threat from cyberattacks across the
entire NatWest Group and against NatWest Group's supply chain networks,
reinforcing the importance of the due diligence of, ongoing risk management
of, and close working relationship with, the third parties on which NatWest
Group relies. NatWest Group is reliant on technology, against which there is a
constantly evolving series of attacks that are increasing in terms of
frequency, sophistication, impact and severity. As cyberattacks evolve and
become more sophisticated, NatWest Group is required to continue to invest
significant resources in additional capability designed to defend against
emerging threats.

Third parties continue to make hostile attempts to gain access to, introduce
malware (including ransomware) into, and exploit potential vulnerabilities of,
financial services institutions' IT systems, including those of NatWest Group.
For example, in 2024, NatWest Group and its supply chain were subjected to a
small number of attempted Distributed Denial of Service and ransomware
attacks. These hostile attempts were addressed without material impact on
NatWest Group or its customers by deploying cybersecurity capabilities and
controls that seek to manage the impact of any such attacks, and sustain
availability of services for NatWest Group's customers. 

Consequently, NatWest Group continues to invest significant resources in
developing and evolving cybersecurity capabilities and controls that are
designed to mitigate the potential effect of such attacks. However, given the
nature of the threat, there can be no assurance that these capabilities and
controls will prevent the potential adverse effect of an attack from
occurring. Refer to 'NatWest Group's operations are highly dependent on its
complex IT systems and any IT failure could adversely affect NatWest Group.'

Any failure in NatWest Group's information and cybersecurity policies,
procedures or controls, may result in significant financial losses, major
business disruption, inability to deliver customer services, or loss of, or
ability to access, data or systems or other sensitive information (including
as a result of an outage) and may cause associated reputational damage. Any of
these factors could increase costs (including costs relating to notification
of, or compensation for customers, credit monitoring or card reissuance),
result in regulatory investigations or sanctions being imposed or may affect
NatWest Group's ability to retain and attract customers. Regulators in the UK,
US, Europe and Asia continue to recognise cybersecurity as an important
systemic risk to the financial sector and have highlighted the need for
financial institutions to improve their monitoring and control of, and
resilience (particularly of critical services) to cyberattacks, and to provide
timely reporting or notification of them, as appropriate (including, for
example, the SEC cybersecurity requirements and the new EU Digital Operational
Resilience Act ('DORA')). Furthermore, cyberattacks on NatWest Group's
counterparties and suppliers may also have an adverse effect on NatWest
Group's operations.

Additionally, malicious third parties may induce employees, customers,
third-party providers or other users with access to NatWest Group's systems to
wrongfully disclose sensitive information to gain access to NatWest Group's
data or systems or that of NatWest Group's customers or employees.
Cybersecurity and information security events can derive from groups or
factors such as: internal or external threat actors, human error, fraud or
malice on the part of NatWest Group's employees or third parties, including
third party providers, or may result from technological failure (including
defective, inadequate or inappropriately used artificial intelligence based
solutions).

NatWest Group expects greater regulatory engagement, supervision and
enforcement to continue in relation to its overall resilience to withstand IT
and IT-related disruption, either through a cyberattack or some other
disruptive event. Such increased regulatory engagement, supervision and
enforcement is uncertain in relation to the scope, cost, consequence and the
pace of change, which may have a material adverse effect on NatWest Group. Due
to NatWest Group's reliance on technology, the adoption of innovative
solutions, the integration of automated processes and artificial intelligence
in its business and the increasing sophistication, frequency and impact of
cyberattacks, such attacks may have an adverse effect on NatWest Group.

In accordance with applicable UK and EU data protection, and cybersecurity
laws and regulations, NatWest Group is required to ensure it implements
timely, appropriate and effective organisational and technological safeguards
against unauthorised or unlawful access to the data of NatWest Group, its
customers and its employees. In order to meet this requirement, NatWest Group
relies on the effectiveness of its internal policies, controls and procedures
to protect the confidentiality, integrity and availability of information held
on its IT systems, networks and devices as well as with third parties with
whom NatWest Group interacts. A failure to monitor and manage data in
accordance with applicable requirements may result in financial losses,
regulatory fines and investigations and associated reputational damage.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group's operations and strategy are highly dependent on the accuracy
and effective use of data.

NatWest Group relies on the availability, sourcing, and effective use of
accurate and high quality data to support, monitor, evaluate, manage and
enhance its operations, innovate its products offering, meet its regulatory
obligations, and deliver its strategy. Investment is being made in data tools
and analytics, including raising awareness around ethical data usage (for
example, in relation to the use of artificial intelligence) and privacy across
NatWest Group. The availability and accessibility of current, complete,
detailed, accurate and, wherever possible, machine-readable customer segment
and sub-sector data, together with appropriate governance and accountability
for data, is fast becoming a critical strategic asset, which is subject to
increased regulatory focus.

Failure to have or be able to access that data or the ineffective use or
governance of that data could result in a failure to manage and report
important risks and opportunities or satisfy customers' expectations including
the inability to deliver products and services. This could also place NatWest
Group at a competitive disadvantage by increasing its costs, inhibiting its
efforts to reduce costs or its ability to improve its systems, controls and
processes. Any of the above could result in a failure to deliver NatWest
Group's strategy.

These data weaknesses and limitations, or the unethical or inappropriate use
of data, and/or non-compliance with data protection laws could give rise to
conduct and litigation risks and may increase the risk of operational
challenges, losses, reputational damage or other adverse consequences due to
inappropriate models, systems, processes, decisions or other actions.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group's operations are highly dependent on its complex IT systems and
any IT failure could adversely affect NatWest Group.

NatWest Group's operations are highly dependent on the ability to process a
very large number of transactions efficiently and accurately while complying
with applicable laws and regulations. The proper functioning of NatWest
Group's transactional and payment systems, financial crime and fraud detection
systems and controls, risk management, credit analysis and reporting,
accounting, customer service and other IT systems, including cloud services
providers (some of which are owned and operated by other entities in NatWest
Group or third parties), as well as the communication networks between its
branches and main data processing centres, is critical to NatWest Group's
operations. Individually or collectively, any system failure (including
defective or inadequate automated processes or artificial intelligence based
solutions), loss of service availability, mobile banking disruption, or breach
of data security could potentially cause significant damage to: (i) important
business services across NatWest Group; and (ii) NatWest Group's ability to
provide services to its customers, which could result in reputational damage,
significant compensation costs and regulatory sanctions (including fines
resulting from regulatory investigations) or a breach of applicable
regulations and could affect NatWest Group's regulatory approvals, competitive
position, business and brands, which could undermine its ability to attract
and retain customers and talent.

NatWest Group outsources certain functions as it innovates and offers new
digital solutions to its customers to meet the demand for online and mobile
banking. Outsourcing alongside remote working heighten the above risks.

NatWest Group uses IT systems that enable remote working interface with
third-party systems. NatWest Group could experience service denials or
disruptions if such IT systems exceed capacity or if NatWest Group or a
third-party system fails or experiences any interruptions, all of which could
result in business and customer interruption and related reputational damage,
significant compensation costs, regulatory sanctions and/or a breach of
applicable regulations.

In 2024, NatWest Group continued to make considerable investments to further
simplify, upgrade and improve its IT and technology capabilities (including
migration of certain services to cloud platforms). NatWest Group continues to
develop and enhance digital services for its customers and seeks to improve
its competitive position through integrating automated processes and
artificial intelligence based solutions in its business and by enhancing
controls and procedures and strengthening the resilience of services including
cybersecurity. Any failure of these investment and rationalisation initiatives
to achieve the expected results, due to cost challenges, poor implementation,
defects or otherwise, may adversely affect NatWest Group's operations, its
reputation and ability to retain or grow its customer business or adversely
affect its competitive position.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group relies on attracting, retaining and developing diverse senior
management and skilled personnel, and is required to maintain good employee
relations.

NatWest Group's success depends on its ability to attract, retain (through
creating an inclusive environment), and develop highly skilled and qualified
diverse personnel, including senior management, directors and key employees
(including technology and data focused roles), in a highly competitive market
and under internal cost efficiency pressures.

NatWest Group's ability to attract, retain and develop highly skilled and
qualified diverse senior management and skilled personnel may be more
difficult due to cost-controlling measures, failure to pay employees
competitive compensation, heightened regulatory oversight of banks and the
increasing scrutiny of, and (in some cases) restrictions placed upon, employee
compensation arrangements. In addition, certain economic, market and
regulatory conditions and political developments may reduce the pool of
candidates for key management and non-executive roles, including non-executive
directors with the right skills, knowledge and experience, or may increase the
number of departures of existing employees. Moreover, a failure to foster a
diverse and inclusive workforce may adversely affect NatWest Group's employee
engagement and the formulation and execution of its strategy and could also
have an adverse effect on its reputation with employees, customers, investors
and regulators.

Many of NatWest Group's employees in the UK, the Republic of Ireland and
continental Europe are represented by employee representative bodies,
including trade unions and works councils. Engagement with its employees and
such bodies is important to NatWest Group in maintaining good employee
relations. Any failure to do so may adversely affect NatWest Group's ability
to operate its business effectively.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

A failure in NatWest Group's risk management framework could adversely affect
NatWest Group, including its ability to achieve its strategic objectives.

Risk management is an integral part of all of NatWest Group's activities and
delivery of its long-term strategy. NatWest Group's Enterprise-Wide Risk
Management Framework sets out the approach for managing risk within NatWest
Group including in relation to risk governance and risk appetite. A failure to
adhere to this framework and to agreed risk appetite statements, or any
material weaknesses or deficiencies in the framework's controls and
procedures, could adversely affect NatWest Group's financial condition and
strategic delivery, as well as accurate reporting of risk exposures.

In addition, financial crime risk management is dependent on the use and
effectiveness of financial crime assessment, systems and controls. Weak or
ineffective financial crime processes and controls may risk NatWest Group
inadvertently facilitating financial crime which may result in regulatory
investigation, sanction, litigation, fines and/or reputational damage.

Financial crime continues to evolve, whether through fraud, scams,
cyberattacks or other criminal activity. These risks are exacerbated as
NatWest Group continues to innovate its product offering and increasingly
offers digital solutions to its customers, including through mobile banking.
NatWest Group has made and continues to make significant, multi-year
investments to strengthen and improve its overall financial crime control
framework with prevention systems and capabilities, including investment in
new technologies and capabilities to further enhance customer due diligence,
transaction monitoring, sanctions and anti-bribery and corruption systems.

Financial risk management is highly dependent on the use and effectiveness of
internal stress tests and models and ineffective risk management may arise
from a wide variety of factors, including lack of transparency or incomplete
risk reporting, manual processes and controls, inaccurate data, inadequate IT
systems, unidentified conflicts or misaligned incentives, lack of
accountability control and governance, incomplete risk monitoring and
management, insufficient challenges or assurance processes, or a failure to
commence or timely complete risk remediation projects. Failure to manage risks
effectively, or within regulatory expectations, could adversely affect NatWest
Group's reputation or its relationship with its regulators, customers,
shareholders or other stakeholders.

NatWest Group's operations are inherently exposed to conduct risks, which
include business decisions, actions or reward mechanisms that are not
responsive to or aligned with NatWest Group's regulatory obligations,
customers' needs or do not reflect NatWest Group's strategy, ineffective
product management, unethical or inappropriate use of data, information
asymmetry, implementation and utilisation of new technologies, outsourcing of
customer service and product delivery, inappropriate behaviour towards
customers, customer outcomes, the possibility of mis-selling of financial
products and mishandling of customer complaints. Some of these risks have
materialised in the past and ineffective management and oversight of conduct
risks may lead to further remediation and regulatory intervention or
enforcement.

NatWest Group's businesses are also exposed to risks from employee, contractor
or service providers misconduct including non-compliance with policies and
regulations, negligence or fraud (including financial crimes and fraud), any
of which could result in regulatory fines or sanctions and serious
reputational or financial harm to NatWest Group. Hybrid working arrangements
for NatWest Group employees place heavy reliance on the IT systems that enable
remote working and may place additional pressure on NatWest Group's ability to
maintain effective internal controls and governance frameworks and increase
operational risk. Hybrid working arrangements are also subject to regulatory
scrutiny to ensure adequate recording, surveillance and supervision of
regulated activities, and compliance with regulatory requirements and
expectations, including requirements to: meet threshold conditions for
regulated activities; ensure the ability to oversee functions (including any
outsourced functions); ensure no detriment is caused to customers; and ensure
no increased risk of financial crime.

In addition, the UK's Net Zero Strategy and NatWest Group's strategy relating
to climate and sustainability are important drivers as to how NatWest Group
integrates climate (including physical and transition risks) and other
sustainability-related risks into its risk management framework and practices
(including for financing activities or engaging with counterparties (including
suppliers)). Furthermore, legislative and regulatory authorities are
publishing expectations as to how banks should prudently manage and
transparently disclose climate and other sustainability-related risks. Any
failure of NatWest Group to fully and timely embed climate and other
sustainability-related risks into its risk management practices and framework
to appropriately identify, assess, prioritise and monitor such risks may have
an adverse effect on NatWest Group. Similarly, if the Group is unable to apply
the appropriate product governance processes in line with NatWest Group's
strategy and applicable legal and regulatory requirements and expectations it
may have an adverse effect on NatWest Group.

NatWest Group seeks to embed a risk awareness culture across the organisation
and has implemented policies and allocated new resources across all levels of
the organisation to manage and mitigate conduct risk and expects to continue
to invest in risk management, including the ongoing development of a risk
management strategy in line with regulatory expectations. However, such
efforts may not insulate NatWest Group from instances of misconduct and no
assurance can be given that NatWest Group's strategy and control framework
will be effective. Any failure in NatWest Group's risk management framework
may result in the inability to achieve its strategic objectives for its
customers, employees and wider stakeholders.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group's operations are subject to inherent reputational risk.

Reputational risk relates to stakeholder and public perceptions of NatWest
Group arising from an actual or perceived failure to meet stakeholder or the
public's expectations, including with respect to NatWest Group's strategy and
related targets or due to any events, behaviour, action or inaction by NatWest
Group, its employees or those with whom NatWest Group is associated. Refer to
'NatWest Group's businesses are subject to substantial regulation and
oversight, which are constantly evolving and may adversely affect NatWest
Group.' This includes harm to its brand, which may be detrimental to NatWest
Group's business, including its ability to build or sustain business
relationships with customers, stakeholders and regulators, and may cause low
employee morale, regulatory censure or reduced access to, or an increase in
the cost of, funding. Reputational risk may arise whenever there is, or there
is perceived to be, a material lapse in standards of integrity, controls,
compliance, customer or operating efficiency, or regulatory or press scrutiny,
and may adversely affect NatWest Group's ability to attract and retain
customers.

In particular, NatWest Group's ability to attract and retain customers
(particularly, corporate/institutional and retail depositors), and talent, and
engage with counterparties may be adversely affected by factors including:
negative public opinion resulting from the actual or perceived manner in which
NatWest Group conducts or modifies its business activities and operations,
media coverage (whether accurate or otherwise), employee misconduct, NatWest
Group's financial performance, IT systems failures or cyberattacks, data
breaches, financial crime and fraud, the level of direct and indirect
government support, or the actual or perceived practices in the banking and
financial industry in general, or a wide variety of other factors.

Technologies, in particular online social networks and other broadcast tools
that facilitate communication with large audiences in short timeframes and
with minimal costs, may also significantly increase and accelerate the impact
of damaging information and allegations.

Although NatWest Group has a Reputational Risk Policy and framework to
identify, measure and manage material reputational risk exposures, there is a
risk that it may not be successful in avoiding or mitigating damage to its
business or its various brands from reputational risk.

Any of the above aspects of reputational risk may have a material adverse
effect on NatWest Group's future results, financial condition, prospects,
and/or reputation.

Legal and regulatory risk

NatWest Group's businesses are subject to substantial regulation and
oversight, which are constantly evolving and may adversely affect NatWest
Group.

NatWest Group is subject to extensive laws, regulations, guidelines, corporate
governance practice and disclosure requirements, administrative actions and
policies in each jurisdiction in which it operates, which represents ongoing
compliance and conduct risks. Many of these are constantly evolving and are
subject to further material changes, which may increase compliance and conduct
risks, particularly as the laws of different jurisdictions (including those of
the EU/EEA and UK) diverge. NatWest Group expects government and regulatory
intervention in the financial services industry to remain high for the
foreseeable future.

Regulators and governments continue to focus on reforming the prudential
regulation of the financial services industry and the way financial services
are conducted. Measures have included: enhanced capital, liquidity and funding
requirements, through initiatives such as the Basel 3.1 standards
implementation (and any resulting effect on RWAs and models), the UK
ring-fencing regime, the strengthening of the recovery and resolution
framework applicable to financial institutions in the UK, EU and US, financial
industry reforms (such as the FSMA 2023), corporate governance requirements,
rules relating to the compensation of senior management and other employees,
enhanced data protection and IT resilience requirements (such as DORA),
financial market infrastructure reforms, enhanced regulations in respect of
the provision of 'investment services and activities'.

There is also increased regulatory focus in certain areas, including conduct,
model risk governance, consumer protection in retail or other financial
markets (such as the FCA's rules governing interactions with and the provision
of services to retail customers, the 'Consumer Duty'), competition and
disputes regimes, anti-money laundering, anti-corruption, anti-bribery,
anti-tax evasion, payment systems, sanctions and anti-terrorism laws and
regulations.

In addition, there is significant oversight by competition authorities. The
competitive landscape for banks and other financial institutions in the UK,
EU/EEA, US and Asia is rapidly changing. Recent regulatory and legal changes
have resulted, and may continue to result, in new market participants and
changed competitive dynamics in certain key areas. Regulatory and competition
authorities, including the CMA, are also looking at and focusing more on how
they can support competition and innovation in digital and other markets.
Future competition investigations, market reviews, or regulation of mergers
may lead to the imposition of financial penalties or market remedies that may
adversely affect NatWest Group's competitive or financial position. Recent
regulatory changes and heightened levels of public and regulatory scrutiny in
the UK, EU and US have resulted in increased capital, funding and liquidity
requirements, changes in the competitive landscape, changes in other
regulatory requirements and increased operating costs, and have impacted, and
will continue to impact, product offerings and business models.

Moreover, uncertainties remain as to the extent to which EU/EEA laws will
diverge from UK law. For example, bank regulation in the UK may diverge from
European bank regulation following the enactment of the Financial Services and
Markets Act 2023 ('FSMA 2023') and the Retained EU Law (Revocation and Reform)
Act 2023. In particular, FSMA 2023 provides for the revocation of retained EU
laws relating to financial services regulation, but sets out that this process
will likely take a number of years and the intention is that specific retained
EU laws will not be revoked until such time as replacement regulatory rules
are in place.

The actions taken by regulators in response to any new or revised bank
regulation and other rules affecting financial services, may adversely affect
NatWest Group, including its business, non-UK operations, group structure,
compliance costs, intragroup arrangements and capital requirements.

Other areas in which, and examples of where, governmental policies, regulatory
and accounting changes, and increased public and regulatory scrutiny may have
an adverse effect (some of which could be material) on NatWest Group include,
but are not limited to:

-      general changes in government, regulatory, competition, or central
bank policy (such as changes to the BoE levy (including as a result of the
proposed Bank Resolution (Recapitalisation) Bill), or changes in regulatory
regimes that may influence investor decisions in the jurisdictions in which
NatWest Group operates;

-      rules relating to foreign ownership, expropriation,
nationalisation and confiscation or appropriation of assets;

-      increased scrutiny including from the CMA, FCA and Payment Systems
Regulator ('PSR') for the protection and resilience of, and competition and
innovation in, digital and other markets, UK payment systems (with the
development of the government's National Payments Vision and Strategy) and
retail banking developments relating to the UK initiative on Open Banking,
Open Finance and the European directive on payment services;

-      the ongoing compliance with CMA's Market Orders including the
Retail Banking Market Order 2017 and SME Undertakings;

-      ongoing competition litigation in the English courts around
payment card interchange fees, combined with increased regulatory scrutiny
(from the PSR) of the Visa and Mastercard card schemes

-      increased risk of new class action claims being brought against
NatWest Group in the Competition Appeal Tribunal for breaches of competition
law;

-      increased risk of legal action against NatWest Group for financing
or contributing to climate change and nature-related degradation;

-      new or increased regulations relating to customer data protection
as well as IT controls and resilience, such as the India Digital Personal Data
Protection Act 2023;

-      the introduction of, and changes to, taxes, levies or fees
applicable to NatWest Group's operations, such as changes in tax rates
(including changes to the taxation of non-UK domiciled individuals), changes
in the scope and administration of the Bank Levy, increases in the bank
corporation tax surcharge in the UK, restrictions on the tax deductibility of
interest payments or further restrictions imposed on the treatment of
carry-forward tax losses that reduce the value of deferred tax assets and
require increased payments of tax;

-      the potential introduction by the BoE of a Central Bank Digital
Currency which could result in deposit outflows, higher funding costs, and/or
other implications for UK banks;

-      regulatory enforcement in the form of PRA imposed financial
penalties for failings in banks' regulatory reporting governance and controls,
and ongoing regulatory scrutiny, and the PRA's thematic reviews of the
governance, controls and processes for preparing regulatory returns of
selected UK banks, including NatWest Group;

-      increased regulatory scrutiny from the ECB in relation to NatWest
Group's EU based activities;

-      changes in policy and practice regarding enforcement,
investigations and sanctions, supervisory activities and reviews;

-      the introduction of regulatory requirements to ensure sufficient
access by the general public to cash services such as branches and ATMs;

-      'Dear CEO' and similar letters issued by supervisors and
regulators from time to time;

-      recent or proposed US regulations around cybersecurity incidents,
climate disclosures and other climate and sustainability-related rules, or
greenwashing;

-      new or increased regulations relating to financial crime, and

-      any regulatory requirements relating to the use of artificial
intelligence and large language models across the financial services industry
(such as the European Union Artificial Intelligence Act).

Any of these developments (including any failure to comply with or correctly
interpret new rules and regulations) could also have an adverse effect on
NatWest Group's authorisations and licences, the products and services that it
may offer, its reputation and the value of its assets, NatWest Group's
operations or legal entity structure, and the manner in which it conducts its
business.

Material consequences could arise should NatWest Group be found non-compliant
with these regulatory requirements. Regulatory developments may also result in
an increased number of regulatory investigations and proceedings and have
increased the risks relating to NatWest Group's ability to comply with the
applicable body of rules and regulations in the manner and within the
timeframes required.

Changes in laws, rules or regulations, or in their interpretation or
enforcement, or the implementation of new laws, rules or regulations,
including contradictory or conflicting laws, rules or regulations by key
regulators or policymakers in different jurisdictions, or failure by NatWest
Group to comply with such laws, rules and regulations, may adversely affect
NatWest Group's business, results of operations and outlook. In addition,
uncertainty and insufficient international regulatory coordination as enhanced
supervisory standards are developed and implemented may adversely affect
NatWest Group's ability to engage in effective business, capital and risk
management planning.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

NatWest Group is exposed to the risks of various litigation matters,
regulatory and governmental actions and investigations as well as remedial
undertakings, the outcomes of which are inherently difficult to predict, and
which could have an adverse effect on NatWest Group.

NatWest Group's operations are diverse and complex and it operates in legal
and regulatory environments that expose it to potentially significant civil
actions (including those following on from regulatory sanction), as well as
criminal, regulatory and governmental proceedings. NatWest Group has resolved
a number of legal and regulatory actions over the past several years but
continues to be, and may in the future be, involved in such actions in the US,
the UK, Europe, Asia and other jurisdictions.

NatWest Group is, has been or will likely be involved in a number of
significant legal and regulatory actions, including investigations,
proceedings and ongoing reviews (both formal and informal) by governmental law
enforcement and other agencies and litigation proceedings, including in
relation to the offering of securities, conduct in the foreign exchange
market, the setting of benchmark rates such as LIBOR and related derivatives
trading, the issuance, underwriting, and sales and trading of fixed-income
securities (including government securities), product mis-selling, customer
mistreatment, anti-money laundering, antitrust, VAT recovery, record keeping,
reporting and various other issues. There is also an increasing risk of new
class action claims being brought against NatWest Group in the Competition
Appeal Tribunal for breaches of competition law, as well as a risk of activist
actions, particularly relating to climate change and sustainability-related
matters. Legal and regulatory actions are subject to many uncertainties, and
their outcomes, including the timing, amount of fines, damages or settlements
or the form of any settlements, which may be material and in excess of any
related provisions, are often difficult to predict, particularly in the early
stages of a case or investigation. NatWest Group's expectation for resolution
may change and substantial additional provisions and costs may be recognised
in respect of any matter.

The resolution of significant investigations includes NWM Plc's December 2021
spoofing-related guilty plea in the United States that was agreed with the US
Department of Justice ('DOJ'), and involves a multi-year period of probation,
an independent corporate monitor and the ongoing implementation of
recommendations made by it, and commitments to compliance programme reviews
and improvements, and reporting obligations. In the event that NWM Plc does
not meet its obligations to the DOJ, this may lead to adverse consequences
such as findings that NWM Plc violated its probation term and possible
re-sentencing, increased costs from any extension of monitorship and/or the
period of the probation, amongst other consequences. For additional
information relating to this and other legal and regulatory proceedings and
matters to which NatWest Group is currently exposed, see 'Litigation and
regulatory matters' at Note 26 to the consolidated accounts.

Recently resolved matters or adverse outcomes or resolution of current or
future legal, regulatory or other matters, including conduct-related reviews
and redress projects, could increase the risk of greater regulatory and
third-party scrutiny and/or result in future legal or regulatory actions, and
could have material financial, reputational, or collateral consequences for
NatWest Group's business and result in restrictions or limitations on NatWest
Group's operations.

These may include the effective or actual disqualification from carrying on
certain regulated activities and consequences resulting from the need to
reapply for various important licences or obtain waivers to conduct certain
existing activities of NatWest Group, particularly but not solely in the US,
which may take a significant period of time and the results and implications
of which are uncertain.

Disqualification from carrying on any activities, whether automatically as a
result of the resolution of a particular matter or as a result of the failure
to obtain such licences or waivers could adversely affect NatWest Group's
business, in particular in the US. This in turn and/or any fines, settlement
payments or penalties may have an adverse effect on NatWest Group.

Failure to comply with undertakings made by NatWest Group to its regulators,
or the conditions of probation resulting from the spoofing-related guilty
plea, may result in additional measures or penalties being taken against
NatWest Group. In addition, any failure to administer conduct redress
processes adequately, or to handle individual complaints fairly or
appropriately, could result in further claims as well as the imposition of
additional measures or limitations on NatWest Group's operations, additional
supervision by NatWest Group's regulators, and loss of investor confidence.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

Changes in tax legislation (or application thereof) or failure to generate
future taxable profits may impact the recoverability of certain deferred tax
assets recognised by NatWest Group.

In accordance with the accounting policies set out in 'Critical accounting
policies and sources of estimation uncertainty', NatWest Group has recognised
deferred tax assets on losses available to relieve future profits from tax
only to the extent it is probable that they will be recovered. The deferred
tax assets are quantified on the basis of current tax legislation and
accounting standards and are subject to change in respect of the future rates
of tax or the rules for computing taxable profits and offsetting allowable
losses.

Failure to generate sufficient future taxable profits or further changes in
tax legislation or the application thereof (including with respect to rates of
tax), or changes in accounting standards may reduce the recoverable amount of
the recognised tax loss deferred tax assets, amounting to £1.106 billion as
at 31 December 2024. Changes to the treatment of certain deferred tax assets
may impact NatWest Group's capital position. In addition, NatWest Group's
interpretation or application of relevant tax laws may differ from those of
the relevant tax authorities and provisions are made for potential tax
liabilities that may arise on the basis of the amounts expected to be paid to
tax authorities. The amounts ultimately paid may differ materially from the
amounts provided depending on the ultimate resolution of such matters.

Any of the above may have a material adverse effect on NatWest Group's future
results, financial condition, prospects, and/or reputation.

Climate and sustainability-related risks

NatWest Group and its Value Chain face climate and sustainability-related
risks that may adversely affect NatWest Group.

Climate change has been identified as a source of systemic risk, with
potentially severe consequences for financial institutions. The financial
impacts of climate and sustainability-related risks are expected to be
widespread and may disrupt the orderly functioning of financial markets and
have an adverse effect on financial institutions, including NatWest Group.

Financial and non-financial risks from climate change can arise through
physical and transition risks. In addition, physical and transition risks can
trigger further losses, stemming directly or indirectly from legal claims,
litigation and conduct liability (referred to as 'liability risk').

Whilst there are significant uncertainties relating to the location, magnitude
and timing of climate-related physical risks, scientific research suggests
physical risks may occur in increasing frequency and severity. Climate-related
events like flood, wildfires and climatic changes can damage assets and
disrupt operations, leading to increased costs, changes in asset values and
loan defaults.

Damage or disruption to NatWest Group customers' and counterparties'
(including suppliers') properties, premises and operations could disrupt
business, result in the deterioration of the value of collateral or insurance
shortfalls, impair asset values and negatively impact the creditworthiness of
customers and their ability and/or willingness to pay fees, afford new
products or repay their debts, leading to increased default rates,
delinquencies, write-offs and impairment charges in NatWest Group's
portfolios. In addition, NatWest Group's premises and operations, or those of
its critical outsourced functions may experience damage or disruption leading
to increased costs for NatWest Group.  

To meet the goals of the UK's Net Zero Strategy by 2050 will require a
net-zero transition across all sectors of the UK economy. The timing and pace
of the transition to a net-zero economy will depend on many factors and
uncertainties and may be near-term, gradual and orderly, or delayed, rapid and
disorderly, or a combination of these. A transition to a net-zero economy
requires significant and timely policy and regulatory changes, immediate
actions from national and regional governments, new technological innovations
and changes to supply and demand systems within industries. The transition to
a net-zero economy may also trigger changes in consumer behaviour and market
sentiment. In addition, there is significant uncertainty about how climate
change and the world's transition to a net-zero economy will unfold over time
and how and when climate and other sustainability-related risks will manifest.
These timeframes are considerably longer than NatWest Group's historical and
current strategic, financial, resilience and investment planning horizons.

NatWest Group and its value chain (including its investors, customers,
counterparties (including its suppliers), business partners and employees)
('NatWest Group's Value Chain') may face financial and non-financial risks
arising from broader (i.e. non-climate-related) sustainability issues such as
risks relating to nature loss (such as the loss and/or decline of the state of
nature including but not limited to, the reduction of any aspect of biological
diversity and other forms of environmental degradation such as air, water and
land pollution, soil quality degradation and water stress). NatWest Group
recognises that climate and nature-related risks are interlinked and therefore
NatWest Group aims to work towards enhancing processes and capabilities to
include assessments of nature-related risks and opportunities within
governance, risk management and stakeholder engagement practices.

Climate and nature-related risks may:

-      adversely affect the broader economy, influencing interest rates,
inflation and growth, impacting profitability and stability;

-      adversely affect asset pricing and valuations of NatWest Group's
own and other securities and, in turn, the wider financial system;

-      adversely affect economic activities directly (for example through
lower corporate profitability or the devaluation of assets) or indirectly (for
example through macro-financial changes);

-      adversely affect the viability or resilience of business models
over the medium to longer term, particularly those business models most
vulnerable to climate and sustainability-related risks;

-      trigger losses stemming directly or indirectly from liability
risks and/or reputational damage, including as a result of adverse media
coverage, or activists, the public or NatWest Group's Value Chain associating
NatWest Group or its customers with adverse climate and sustainability-related
issues;

-      adversely affect NatWest Group's ability to deliver on its
strategy, including achieving its climate ambitions and targets; and

-      exacerbate other risk categories to which NatWest Group is
exposed, including credit risk, operational risk (including business
continuity), market risk (both traded and non-traded), liquidity and funding
risk (for example, net cash outflows or depletion of liquidity buffers),
reputational risk, pension risk, regulatory compliance risk and conduct risk.;

In addition to nature-related risks, NatWest Group and NatWest Group's Value
Chain may face financial and non-financial risks arising from other
sustainability-related issues such as: (i) risks related to social issues
(including human rights), for example, negative impact on people's standard of
living and health, political and geopolitical tensions and conflict
endangering people's lives and security, displacement of communities, the
violation of indigenous people's rights, unjust working conditions and labour
rights breaches (including discrimination, lack of diversity and inclusion,
inequality, gender/ethnicity pay gap and payments under the minimum wage),
modern slavery, accessible banking and financial inclusion, financial crime,
data privacy breaches, innovation, digitalisation and AI, and lack of support
for the vulnerable; and (ii) governance-related risks (including board
diversity, ethical corporate culture, executive compensation and management
structure).

There is also growing expectation from customers, investors, policymakers,
regulators and society of the need for a "just transition"- in recognition
that the transition to net zero should happen in a way that is as fair and
inclusive as possible to everyone concerned. Although NatWest Group continues
to evaluate and assess whether and, if so, how it integrates 'just transition'
considerations into its strategy and decision-making, a failure (or perception
of failure) by NatWest Group to sufficiently factor these considerations into
existing products and service offerings may adversely affect NatWest Group,
including NatWest Group's reputation.

If NatWest Group fails to identify, assess, prioritise, monitor, react to and
prevent appropriately: (i) climate and sustainability-related impacts, risks
and opportunities; and (ii) changing regulatory and market expectations and
societal preferences that NatWest Group and NatWest Group's Value Chain face,
in a timely manner or at all, this may have a material adverse effect on
NatWest Group's business, future results, financial condition, prospects
(including cash flows, access to finance or cost of capital over the short,
medium or long term), reputation or the price of its securities.

NatWest Group's strategy relating to climate change, ambitions, targets and
transition plan entail significant execution and/or reputational risks and are
unlikely to be achieved without significant and timely government policy,
technology and customer behavioural changes.

At NatWest Group's Annual General Meeting in April 2022, ordinary shareholders
passed an advisory 'Say on Climate' resolution endorsing NatWest Group's
previously announced strategic direction on climate change, including its
ambitions to at least halve the climate impact of its financing activity by
2030, achieve alignment with the 2015 Paris Agreement and reach net zero
across its financed emissions, assets under management and operational value
chain by 2050. NatWest Group may also announce other climate and
sustainability-related ambitions, targets and initiatives and/or retire or
change existing ones.

Making the changes necessary to achieve NatWest Group's climate ambitions and
targets and executing its transition plan, together with the active management
of climate and sustainability-related risks and other regulatory, policy and
market changes, is likely to necessitate material changes to NatWest Group's
business, operating model, its existing exposures and the products and
services NatWest Group provides to its customers (potentially on accelerated
timescales). NatWest Group may be required to: (i) in the medium and long term
significantly reduce its financed emissions and its exposure to customers that
do not align with a transition to net zero or do not have a credible
transition plan in place, and (ii) divest or discontinue certain activities
for regulatory or legal reasons or in response to the transition to a less
carbon-dependent economy. Increases in lending and financing activities may
wholly or partially offset some or all these reductions, which may increase
the extent of changes and reductions necessary.

Making the necessary changes, or failing to make the necessary changes in a
timely manner, or at all to achieve NatWest Group's climate ambitions and
targets and executing its transition plan, together with the active management
of climate and sustainability-related risks and other regulatory, policy and
market changes may have an adverse effect on NatWest Group and NatWest Group's
ability to achieve its climate and financial ambitions and targets, take
advantage of climate change-related opportunities and generate sustainable
returns.

NatWest Group's ability to achieve its strategy, including its climate
ambitions and targets, will significantly depend on many factors and
uncertainties beyond NatWest Group's control. These include: (i) the extent
and pace of climate change, including the timing and manifestation of physical
and transition risks; (ii) the macroeconomic environment; (iii) the
effectiveness of actions of governments, legislators, regulators and
businesses; (iv) the response of the wider society, NatWest Group's Value
Chain and other stakeholders to mitigate the impact of climate and
sustainability-related risks; (v) changes in customer behaviour and demand;
(vi) appetite for new markets, credit appetite, concentration risk appetite,
lending opportunities; (vii) developments in the available technology; (viii)
the rollout of low carbon infrastructure; and (ix) the availability of
accurate, verifiable, reliable, auditable, consistent and comparable data.
These external factors and other uncertainties will make it challenging for
NatWest Group to meet its climate ambitions and targets and there is a
significant risk that all or some of these ambitions and targets will not be
achieved or not achieved within the intended timescales.

NatWest Group's ability to achieve its climate ambitions and targets depends
to a significant extent on the timely implementation and integration of
appropriate government policies. The UK Climate Change Committee (the 'UK
CCC') 2024 Progress Report to the UK Parliament states that the UK is not on
track to hit its legislated target to reduce emissions in 2030 by 68% compared
to 1990 levels, and only a third of the emission reductions required to
achieve the UK's 2030 target are currently covered by credible plans, with
action needed across all sectors of the economy. NatWest Group's climate
ambitions are unlikely to be achieved without timely and appropriate
government policy and technology developments, as well as supplier, customer
and societal response required to support the transition.

The UK CCC is expected to publish its Seventh Carbon Budget on 26 February
2025. NatWest Group expects this to take into account new UK policy
initiatives announced by the UK government in November 2024 and NatWest Group
plans to review its climate ambitions in the context of the of the UK's
Seventh Carbon Budget, once released.

Climate and sustainability matters are also becoming increasingly politicised
and polarised.

Some of NatWest Group's customers, investors or other stakeholders may decide
not to do business with NatWest Group because, according to their own
assessment, NatWest Group's strategy, ambitions and targets related to climate
and sustainability do not meet their expectations, either for lacking the
necessary ambition or progress or for being perceived as overly concerned
about sustainability.

Any delay or failure in putting into effect, making progress against or
meeting NatWest Group's climate-related ambitions, targets and plans may have
a material adverse effect on NatWest Group's future results, financial
condition, prospects, and/or reputation and may increase the climate and
sustainability-related risks NatWest Group faces.

There are significant limitations related to accessing accurate, reliable,
verifiable, auditable, consistent and comparable climate and other
sustainability-related data that contribute to substantial uncertainties in
accurately modelling and reporting on climate and sustainability information,
as well as making appropriate important internal decisions.

Accurate assessment and reporting of climate and sustainability-related
impacts, risks, opportunities and other climate and sustainability-related
matters, and related metrics depends on access to accurate, reliable,
verifiable, auditable, consistent and comparable data from counterparties
(including suppliers), customers, or other third parties. Data of adequate
quality may not be generally available or, if available, may not be accurate,
reliable, verifiable, auditable, consistent, or comparable. In the absence of
other sources, reporting on climate and sustainability-related matters
(including reporting on NatWest Group's financed emissions) may be based on
estimated or aggregated information developed by third parties that may be
prepared in an inconsistent way using different methodologies,
interpretations, or assumptions that may not be accurate for a given
counterparty (including supplier) or customer. There may also be data gaps and
limitations that are addressed using estimates based on assumptions about
matters that are inherently uncertain or proxy data, such as sectoral averages
or use of emissions estimated by a third party, again developed in a variety
of ways and in some cases not in a timely manner causing data to be
potentially outdated at the time when they are used.

Significant risks, uncertainties and variables are inherent in the assessment,
measurement and mitigation of climate and sustainability-related risks. These
include data quality gaps and limitations mentioned above, as well as the pace
at which climate science, greenhouse gas accounting standards and various
emissions reduction solutions develop. In addition, there is significant
uncertainty about how climate change and the world's transition to a net-zero
economy will unfold over time and how and when climate and
sustainability-related risks will manifest. These timeframes are considerably
longer than NatWest Group's historical and current strategic, financial,
resilience and investment planning horizons.

As a result, NatWest Group's assessment of climate and sustainability impacts,
risks, opportunities and other climate and sustainability-related matters is
likely to evolve and its climate and sustainability-related disclosures may be
amended, updated or restated in the future as the quality and completeness of
NatWest Group's data and methodologies continue to improve.

These data quality challenges, gaps and limitations may also have a material
impact on NatWest Group's ability to make effective business decisions about
climate and sustainability-related impacts, risks, opportunities and other
climate and sustainability-related matters, including risk management
decisions, to comply with disclosure requirements and to monitor and report
progress in meeting ambitions, targets and pathways all of which may have an
adverse effect on NatWest Group. 

Climate-related risks are challenging to model due to their forward-looking
nature, the lack of and/or quality of historical testing capabilities, lack of
accuracy, standardisation and incompleteness of emissions and other climate
and sub-sector related data and the immature nature of risk measurement and
modelling methodologies. As a result, it is very difficult to predict and
model the impact of climate-related risks into precise financial and economic
outcomes.

The evaluation of climate-related risk exposure and the development of
associated potential risk mitigation techniques also largely depend on the
choice of climate scenario modelling methodology and the assumptions made
which involves a number of risks and uncertainties.

Accordingly, these risks and uncertainties coupled with significantly long
timeframes make the outputs of climate-related risk modelling, climate-related
targets (including emission reduction targets) and pathways, inherently more
uncertain than outputs modelled for traditional financial planning cycles
based on historical financial information.

Capabilities within NatWest Group to appropriately assess, model, report and
manage climate and sustainability-related impacts and risks and the
suitability of the assumptions required to model and manage climate and
sustainability-related risks appropriately continue to mature and develop.
Even when those capabilities are appropriately developed, the high level of
uncertainty regarding any assumptions modelled, the highly subjective nature
of risk measurement and mitigation techniques, incorrect or inadequate
assumptions and judgements and data quality gaps and limitations may lead to
inadequate risk management information and frameworks, or ineffective business
adaptation or mitigation strategies or regulatory non-compliance.

Any of the above may have a material adverse effect on NatWest Group's
business, future results, financial condition, prospects, reputation and the
price of its securities.

NatWest Group is becoming subject to more extensive, and sophisticated climate
and other sustainability-related laws, regulation and oversight and there is
an increasing risk of regulatory enforcement, investigation and litigation.

NatWest Group plc and its subsidiaries are increasingly becoming subject to
more extensive, and sophisticated sustainability-related laws and regulations
in the UK, EU and the US, including in relation to mandatory climate and other
sustainability reporting and due diligence, climate transition plan, product
labelling and combatting "greenwashing".

Compliance with these complex, evolving and often diverging legal, regulatory
and supervisory requirements and voluntary standards and initiatives is likely
to require NatWest Group to implement significant changes to its business
models, IT systems, products, governance, internal controls over financial and
non-financial reporting, disclosure controls and procedures, modelling
capability and risk management systems, which may increase the cost of doing
business, result in higher capital requirements, and entail additional change
risk and increased compliance, regulatory sanctions, conduct and litigation
(including settlements) costs. A failure by NatWest Group or any of its
subsidiaries to comply with these climate and sustainability-related legal,
regulatory and supervisory requirements and standards and meet expectations of
NatWest Group's Value Chain in this respect may result in investigations and
regulatory sanction each of which may have an adverse effect on NatWest Group
and the successful implementation of NatWest Group's strategy relating to
climate and sustainability.

Certain non-UK subsidiaries of NatWest Group in the EU and elsewhere may also
be subject to EU, national and other climate and sustainability laws and
regulations which in some cases may differ. Divergence between UK, EU, US and
other climate and sustainability-related legal, regulatory and supervisory
requirements and their interpretation may increase the cost of doing business
(including increased operating costs) and may result in regulatory
non-compliance and litigation risk. Failure by NatWest Group to comply with
these divergent legal, regulatory and supervisory requirements (if applicable
to NatWest Group) may have an adverse effect on NatWest Group's successful
implementation of its strategy relating to climate change including when
setting up its climate ambitions and targets and executing its transition plan
and may result in NatWest Group and/or its subsidiaries not meeting investors'
expectations.

Increasing new climate and sustainability-related jurisprudence, laws and
regulations in the UK and other jurisdictions, regulatory scrutiny, expose
financial institutions, including NatWest Group, to face increasing
litigation, conduct, enforcement and contract liability risks related to
climate change, nature-related degradation, human rights violations and other
social, governance and sustainability-related issues. Furthermore, regulatory
and enforcement activity around climate and sustainability initiatives that
promote more extensive sustainability-related requirements and those that
impose divestment and other sanctions against financial institutions that
implement climate and sustainability-related initiatives is becoming
increasingly divergent and conflicting between jurisdictions, in particular in
the United States.

Any failure of NatWest Group to develop and implement robust and effective
governance, controls and procedures over climate and sustainability-related
impact assessment, disclosure, reporting and other communications and
sustainability-related claims (including in relation to NatWest Group's
products, services and strategy) and comply with them in line with applicable
legal and regulatory requirements and expectations, may give rise to increased
complaints, regulatory enforcement (including sanctions), investigation and
litigation and may adversely affect NatWest Group's regulatory compliance,
investor base and reputation.

Furthermore, there is a risk that shareholders, campaign groups, customers and
activist groups could seek to take legal action against NatWest Group for
financing or contributing to actual or perceived harm to the environment or
people, climate change, nature-related degradation and human rights
violations, failure to implement or follow adequate governance procedures and
for not supporting the principles of 'just transition' (i.e. maximising the
social benefits of the transition, mitigating the social risks of the
transition, empowering those affected by the change, anticipating future
shifts to address issues up front and mobilising investments from the public
and private sectors).

Any of the above may have a material adverse effect on NatWest Group's
business, future results, financial condition, prospects, reputation and the
price of its securities.

 

Legal Entity Identifier: 2138005O9XJIJN4JPN90

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