REG - Nat.Westminster Bk - NatWest Bank Plc - Annual Report and Accounts

NatwestAnnouncement

13/02/2026 09:00

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RNS Number : 8992S  National Westminster Bank PLC  13 February 2026

 

 

National Westminster Bank Plc 13 February 2026

 

Annual Report and Accounts 2025

Pillar 3 Report 2025

 

A copy of the Annual Report and Accounts 2025 for National Westminster Bank
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)

We have also published the 2025 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 extracted from the Annual
Report and Accounts 2025 in full unedited text. Page references in the text
refer to page numbers in the Annual Report and Accounts 2025.

 

Principal Risks and Uncertainties

Set out below are certain risk factors that could have a material adverse
effect on NWB 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 NWB
Group.

Economic and political risk

NWB 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, protectionist
policies, and geopolitical developments.

As a principally UK-focused banking group, NWB 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 NWB 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 taxes),
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 or instability, 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 NWB Group and its customers serve,
rapid changes to the economic environment due to the adoption of technology,
digitisation automation, artificial intelligence, decarbonisation or due to
the consequences of climate change, biodiversity loss, environmental
degradation and widening social and economic inequalities.

NWB 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
NWB 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 (including to
critical infrastructures), 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.

NWB Group may face political uncertainty in Scotland if there is another
Scottish independence referendum. Scottish independence may adversely affect
NWB Group 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's (including NWB Group's)
structure, independently or in conjunction with other mandatory or strategic
structural and organisational changes, any of which could adversely affect NWB
Group. The value of NWB 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 NWB Group's own and other securities, particularly during
periods of market displacement. This could cause a decline in the value of NWB
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 NWB Group's counterparty risk. NWB Group's
risk management and monitoring processes seek to quantify and mitigate NWB
Group's exposure to extreme market moves. However, market events have
historically been difficult to predict, and NWB 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 NWB Group's future
results, financial condition, prospects, and/or reputation.

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

NWB Group's performance is affected by changes in interest rates. Benchmark
overnight interest rates, such as the UK base rate, decreased in 2025. Forward
rates imply UK short term interest rates, including the UK base rate, will
continue to decline in 2026, while they anticipate longer term swap rates,
such as the GBP 5 and 10-year swap rates, will rise slightly across 2026.
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 NWB Group. Further, volatility in interest
rates may result in unexpected outcomes both for interest income and asset and
liability valuations which may adversely affect NWB Group. For example,
decreases in key benchmark rates such as the UK base rate may adversely affect
NWB 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 NWB Group. For example, customers may make
deposit choices that provide them with higher returns than those being offered
by NWB Group. Alternatively, NWB Group may not respond with competitive
products as rapidly, for example following an interest rate change, which may
in turn decrease NWB 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 NWB Group's hedging strategy) and other indicators that may
indirectly affect NWB Group.

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

Fluctuations in currency exchange rates may adversely affect NWB 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 NWB Group's control, may lead to unexpected fluctuations in currency
exchange rates.

Although NWB 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 and branches. NWB Group also issues internal instruments
in non-sterling currencies, such as US dollars and euros, that assist in
meeting NWB Group's regulatory requirements. In addition, NWB Group conducts
banking activities in non-sterling currencies (for example loans, deposits and
dealing activity) which affect its revenue. NWB 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.

NWB 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 NWB Plc.

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

Business change and execution risk

The implementation and execution of NatWest Group's (of which NWB Group forms
part) 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, leveraging simplification and active balance sheet and risk
management) and NWB Group's strategy are intended to reflect the rapidly
changing environment and backdrop of significant societal disruption driven by
technology and changing customer expectations. There is also increasing
scrutiny from stakeholders regarding how NatWest Group (including NWB Group)
addresses environmental and social challenges, including its support for the
transition to net zero, promotion of inclusive workplaces, protection of
customer data, and responsible management of its workforce and of its supply
chain.

As part of NatWest Group's strategy, in December 2023, a transfer pricing
arrangement between NWB Group and NWM Group allowing a sharing of certain
Commercial & Institutional ('C&I') business segment profits through
payment from NWB Group to NWM Group was approved. Weaker performance in NWM
Group, could lead to a higher payment from NWB Group to NWM Group and
therefore reduced profitability in NWB Group.

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

-    macroeconomic challenges which may adversely affect NWB Group's
customers and could in turn adversely impact certain strategic initiatives for
NWB Group (see 'NWB 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, protectionist policies, 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 NWB
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 NWB Group's core offering today;

-    the deployment and integration of artificial intelligence in NWB
Group's processes, controls, and products;

-    The emergence of digital assets and digital currencies operating
alongside the traditional monetary system;

-    increased competitive threats from incumbent banks, fintech companies
(including buy-now-pay-later companies and payment platforms), 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 NWB Group's product offerings and business models;
(see 'NWB Group's businesses are subject to substantial regulation and
oversight, which are constantly evolving and may adversely affect NWB Group';
and 'NWB 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 NWB Group's strategy will require maintaining effective
governance, procedures, systems and controls giving effect to NatWest Group's
strategy, and achieving the stated financial, capital and operational targets
and expectations within the relevant timeframes.

In pursuing NatWest Group's strategy, NWB 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, which may also result in materially higher
costs or risks than initially contemplated. This could lead to additional
management actions by NatWest Group (or NWB Group).The scale and scope of
NatWest Group's (and NWB 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 (and NWB Group) may not be successful in these
respects.

Additionally, as a result of the UK's withdrawal from the EU, certain aspects
of the services provided by NWB 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 11 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 NWB 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 regulatory sanction and/or further costs 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 NWB Group's
products and services offering, its reputation with customers or business
model and adversely affect NWB 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 NWB Group's future
results, financial condition, prospects, and/or reputation.

Acquisitions, divestments, or other transactions by NatWest Group (and/or NWB
Group) may not be successful.

NatWest Group (of which NWB Group forms part) 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 (which includes NWB Group) may have to compete with
other financial institutions or 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 (or NWB Group), and
therefore may be in a position to extract more advantageous terms than NatWest
Group (and NWB Group). Refer to 'NWB Group operates in markets that are highly
competitive, with evolving competitive pressures and technology disruption'.

NatWest Group (of which NWB Group forms part), may pursue these transactions
and initiatives to, amongst others: (i) increase scale and/or 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, NWB 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 (and NWB 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 conduct adequate due diligence
or fail to discover certain contingent or undisclosed liabilities in
businesses that it acquires; and (vi) not obtain necessary regulatory and
other approvals (or onerous conditions may be attached to such approvals).
Accordingly, NatWest Group (or NWB 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 NWB Group's future
results, financial condition, prospects, and/or reputation.

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

NWB Group faces increasing competitive pressures and technology disruption
from incumbent traditional UK banks, challenger banks and building societies
(including those formed through mergers), fintech companies (including
companies offering buy-now-pay-later and payment platforms), large technology
conglomerates and new market entrants leveraging technology and/or other
advantages to compete for customer engagement. "BigTech" companies pose a
threat 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 to serve customers that
increasingly use a constellation of providers to support their complex and
evolving needs (e.g., personal financial management, buy now and pay later,
and paying for goods and services in foreign currency).

Competition is expected to continue and intensify due to: 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, NWB Group may be unable to grow or retain market share due to
new (or more competitive) banking, lending and payment offerings by rapidly
evolving incumbents and challengers (including shadow banks, alternative or
direct lenders and new entrants). Regulatory and competition policy
interventions such as the UK initiative on Open Banking, 'Open Finance' and
remedies imposed by the Competition and Markets Authority ('CMA') are
accelerating these trends. These competitive pressures may result in a shift
in customer behaviour and impact NWB Group's revenues and profitability.
Moreover, innovations in biometrics, artificial intelligence, automation,
cloud services, blockchain, cryptocurrencies and quantum computing may rapidly
facilitate industry transformation.

Increasingly, many of NWB 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. NWB Group's ability to develop or acquire
digital solutions and their integration into NWB Group's structures, systems
and controls has become increasingly important for retaining and growing NWB
Group's market share and customer-facing businesses.

NWB 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 Rooster Money, and Boxed), may not be successful or may not result
in NWB Group offering innovative products and services in the future.
Furthermore, competitors may outperform NWB Group in deploying technologies to
deliver products or services to customers, which may adversely affect NWB
Group's competitive position. In addition, continued industry consolidation
and/or technological developments could result in the emergence of new
competitors or strengthening NWB Group's current competitors, including in
their 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 benefit from scale, technology and
customer engagement advantages and may be able to deliver financial services
at a lower cost base.

Failure to offer competitive, attractive, innovative, and profitable products
that are also released in a timely manner; may result in lost market share,
losses on some or all of NWB Group's initiatives and missed growth
opportunities. For example, NWB 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 NWB Group to compete effectively or will deliver the
expected cost savings. In addition, the implementation of NWB Group's
strategy, delivery on its climate ambition and cost-controlling measures, may
also have an adverse effect on competitiveness and returns. Moreover, activist
investor engagement and increased intervention may challenge NWB Group's
strategic initiatives.

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

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

 

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

To improve efficiencies and best serve customers, certain assets, liabilities,
transactions and activities of NatWest Group (including its Western European
corporate portfolio, principally consisting of term funding and revolving
credit facilities), have been or may 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 customer and
regulatory requirements, such as CRD VI. The timing, success and quantum of
any of these transfers remain uncertain as is the impact of these transactions
on its results of operations. If such transfers are unable to be implemented
in response to triggering events, such as changes in the regulatory
environment, it may result in reputational damage.

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

Financial resilience risk

NWB Group may not achieve its ambitions or targets, meet its guidance, or
generate sustainable returns.

NatWest Group has set a number of financial, capital and operational targets
and provided guidance for NWB Group including in respect of: funding plans and
requirements, employee engagement, diversity and inclusion as well as it
contributes to NatWest Group's climate and sustainability-related ambitions,
targets and commitment and the implementation of NatWest Group's climate
transition plan.

NWB Group's ability to meet NatWest Group and NWB Group's respective
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 NWB 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. A number of factors
may impact NWB Group's ability to maintain its current CET1 ratio, including
impairments, limited organic capital generation or unanticipated increases in
RWAs. Refer to 'The implementation and execution of NatWest Group's (of which
NWB Group forms part) strategy carries execution and operational risks and it
may not achieve its stated aims and targeted outcomes.'

Any failure of NWB Group to achieve NatWest Group and NWB Group's respective
ambitions, targets or meet its guidance may have a material adverse effect on
NatWest Group's future results, financial condition, prospects, and/or
reputation.

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

NWB 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 NWB Group's businesses.

These risks may increase where a significant proportion of NatWest Group's
business activities relate to a single counterparty, a related and/or
connected group of counterparties or a similar type of customer, product,
sector or geography. NWB Group's lending strategy and associated processes and
systems may fail to identify, anticipate or quickly react to weaknesses or
risks (including material cybersecurity vulnerabilities) in a particular
sector, market, borrower or counterparty. NatWest Group may also fail to
assess its 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
impact NWB Group's profitability. Refer to 'Risk and capital management -
Credit Risk'.

The credit quality of NWB 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. For example, as 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. Refer to 'NWB 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, protectionist policies, 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 NWB Group's RWAs. NWB Group may be affected by volatility in property
prices (including as a result of political or economic conditions) given that
NWB Group's mortgage loan portfolio as at 31 December 2025, amounted to
£203.8 billion, representing 58% of NWB Group's total loan exposure. If
property prices were to weaken this could lead to higher impairment charges,
particularly if default rates also increase. In addition, NWB 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 NWB Group after accounting for any IFRS 9 provisions
already made. This is most likely to occur during periods of illiquidity or
depressed asset valuations.

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 NWB 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
NWB 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 NWB Group interacts on a regular
basis. Refer to 'NWB 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 NWB Group and an
inability to engage in routine funding transactions. If NWB 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.

NWB 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. 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 2025 may not prove to be adequate resulting in incremental ECL
provisions for NWB Group.

In line with certain mandated COVID-19 pandemic support schemes, NWB Group
assisted customers with a number of initiatives including NWB Group's
participation in the Bounce Back Loan Scheme ('BBLS') products. NWB 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. NWB Group
may be exposed to fraud, conduct and litigation risks arising from
inappropriate approval (or denial) of BBLS, or the enforcing or pursuing
repayment thereof (or a failure to exercise forbearance), which may have an
adverse effect on NWB 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 NWB Group's future
results, financial condition, prospects, and/or reputation.

NWB 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 NWB Group and the industry as a whole. NatWest Group and NWB Plc (as a
member of the Domestic Liquidity sub-group) are required by regulators in the
UK, the EU and other jurisdictions in which they undertake regulated
activities to maintain adequate liquidity and funding resources. To satisfy
its liquidity and funding requirements, NWB 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 2025, NWB Plc held £315.4
billion in deposits from banks and customers.

Level of deposits at NWB 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 (including from new entrants or fintech
companies (including deposit aggregators)), new deposit offerings (such as
digital assets), 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 NWB
Group's deposits could, particularly if accompanied by one or more of the
other factors mentioned above, adversely affect NWB Group's ability to satisfy
its liquidity or funding needs, or comply with its related regulatory
requirements. In turn, this could require NWB Group to adapt its funding plans
or change its operations.

Macroeconomic developments, political uncertainty, changes in interest rates,
and market volatility could affect NWB 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, NWB Group could be required to change
its funding plans. This could exacerbate funding and liquidity risk, which
may adversely affect NWB Group.

If NWB Plc's liquidity position and/or funding were to come under stress, and
if NWB 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,
repay borrowings as they mature, meet its obligations under committed
financing facilities, comply with regulatory funding requirements, undertake
certain capital and/or debt management activities, and/or fund new loans,
investments and businesses, or make capital distributions to NatWest Group.

If, under a stress scenario, the level of liquidity falls outside of NWB
Group's risk appetite, there are a range of recovery management actions that
NWB 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 NWB Group's operations. Under
the Prudential Regulation Authority (PRA) Rulebook, NatWest Group must
maintain a recovery plan acceptable to its regulator, such that a breach of
NWB Group's applicable liquidity requirements may trigger the application of
NatWest Group's recovery plan to attempt to remediate a deficient liquidity
position. NWB 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 market liquidity, NWB Group may be
unable to sell its assets, at attractive prices, or at all, which may have a
material adverse effect on NWB Group's liquidity.

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

NWB 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 and NWB Plc are required by regulators in the UK, the EU and
other jurisdictions in which they undertake regulated activities to maintain
adequate financial resources. Adequate levels of capital provide NatWest Group
(including NWB Group) with financial flexibility specifically in its core UK
operations in the face of turbulence and uncertainty in the UK and global
economy.

As at 31 December 2025, NWB Plc's CET1 ratio was 11.2%. A number of
subsidiaries and sub-groups within NWB Group, principally banking entities,
are subject to various individual regulatory capital requirements in the UK
and overseas. NatWest Group plc targets a CET1 ratio of around 13%. 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 PRA's views on appropriate buffers above minimum
required operating levels. NatWest Group's current capital strategy for NWB
Plc is based on: the expected accumulation of additional capital through the
accrual of retained earnings over time; the receipt of assets and resultant
RWAs from other NatWest Group entities; RWA growth in the form of regulatory
uplifts and lending growth and other capital management initiatives which
focus on improving capital efficiency through improved data and upstreaming of
dividends from NWB Plc to NatWest Group plc to support NatWest Group meeting
its medium to long term targets.

A number of factors may impact NWB plc's ability to meet and 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 NWB 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; and

-    reduced upstreaming of dividends from NWB plc's subsidiaries because
of changes in their financial performance.

In addition to regulatory capital, NWB Plc is required to maintain a set
quantum of internal MREL set as 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 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 that can externally issue
securities that count towards its MREL requirements, the proceeds of which can
then be downstreamed to meet the internal MREL requirements of its operating
entities, including NWB Plc. NWB Plc is therefore dependent not only on
NatWest Group plc to fund its internal MREL targets over time, but also on
NatWest Group plc's ability to issue and maintain sufficient amounts of
external MREL liabilities to support NWB Plc. In turn, NWB Plc is required to
fund the internal capital and MREL requirements of its subsidiaries.

Refer to 'NWB Group is reliant on NatWest Group for capital and funding
support, and is substantially reliant on NatWest Group plc's ability to issue
sufficient amounts of capital and external MREL securities and downstream the
proceeds to NWB Group. The inability to do so may adversely affect NWB Group.'

If, under a stress scenario, the level of regulatory capital or MREL falls
outside of NWB Plc's risk appetite, there are a range of recovery management
actions (focused on risk reduction and mitigation) that NWB Plc 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
NWB Plc's applicable capital or leverage requirements may trigger the
application of NatWest Group's recovery plan to remediate a deficient capital
position.

Further, NatWest Group's regulator may request that NWB Plc carry out certain
capital management actions or, if NatWest Bank plc's CET1 ratio falls below
7%, certain regulatory capital instruments issued by NatWest Bank Plc will be
written-down or converted into equity, which could result in the reduction in
value of the holdings of NatWest Bank plc's existing shareholders.

Separately, NatWest Bank 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: NWB Group's product offering, credit ratings,
ability to operate its businesses, pursue its strategy and strategic
opportunities, any of which may adversely affect NWB Group. Refer to 'NatWest
Group (including NWB Group) may become subject to the application of UK
statutory stabilisation or resolution powers which may result in, for example,
the write-down or conversion of NWB Group's Eligible Liabilities.'; and also
'NatWest Group, and NWB Group, could be adversely affected if NatWest Group
fails to meet the requirements of regulatory stress tests, or if its
resolution preparations are deemed inadequate.'.

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

NWB Group is reliant on NatWest Group for capital and funding support, and is
substantially reliant on NatWest Group plc's ability to issue sufficient
amounts of capital and external MREL securities and downstream the proceeds to
NWB Group. The inability to do so may adversely affect NWB Group.

NWB Plc receives capital and funding from NatWest Group. NWB Plc has set
target levels for different tiers of capital and for the internal MREL, as
percentages of its RWAs. The level of capital and funding required for NWB Plc
to meet its internal targets is therefore a function of the level of RWAs and
its leverage exposure in NWB Plc and this may vary over time.

NWB Plc's internal MREL comprises the capital value of regulatory capital
instruments and loss-absorbing senior funding issued by NWB Plc. The BoE has
identified that the preferred resolution strategy for NatWest Group is as a
single point of entry at NatWest Group plc. As a result, only NatWest Group
plc is able to issue Group MREL eligible liabilities to third-party investors,
using the proceeds to fund the internal MREL targets and/or requirements of
its operating entities, including NWB Plc.

NWB Plc is therefore dependent on NatWest Group plc to fund its internal
capital targets and its ability to source appropriate funding at NatWest Group
plc level to support this.

NWB Plc is also dependent on NatWest Group plc to fund its internal MREL
target over time and its ability to raise and maintain sufficient amounts of
external MREL liabilities to support this.

If NatWest Group plc is unable to issue adequate levels of MREL securities
such that it is unable to downstream sufficient amounts to NWB Plc, this could
lead to a failure of NWB plc to meet its own individual internal MREL
requirements as well as the internal MREL requirements of subsidiaries within
NWB Group, which in either case may have a material adverse effect on NWB
plc's future results, financial condition, prospects, and reputation. Refer to
'NWB 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'.

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

Rating agencies regularly review NatWest Group plc, NWB Plc and other NatWest
Group entities' credit ratings and outlooks. NWB 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 NWB 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 NWB Group
operates; the legal and regulatory frameworks applicable to NWB 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 NWB Group's key markets
(including inflation and interest rates, supply chain disruption,
protectionist policies, and geopolitical developments); and/or any reduction
of the UK's sovereign credit rating and market uncertainty. In addition,
credit rating agencies take into consideration sustainability-related factors,
including climate, environmental, social and governance related risk, as part
of their credit rating analysis (as do investors in their investment
decisions).

Any reductions in the credit ratings of NatWest Group plc, NWB Plc or of
certain other NatWest Group entities could have adverse consequences
including, without limitation, (i) reduced access to capital markets, (ii) a
reduction in deposit base, and (iii) triggering additional collateral or other
requirements in NatWest Group's funding arrangements or the need to amend such
arrangements. Any of these consequences could adversely affect NWB Group's
liquidity and funding position, cost of funding and could limit the range of
counterparties willing to enter into transactions with NWB Group on favourable
terms, or at all. This may in turn adversely affect NWB Group's competitive
position and threaten its prospects.

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

NWB 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 NWB Group's business, strategy and capital
requirements, NWB 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, NWB Group
utilises models for valuations, credit approvals, calculation of loan
impairment charges on an IFRS 9 basis, financial reporting and to help address
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'). NWB 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 (which includes NWB Group) also continues to
invest in building new capabilities that employ new artificial intelligence
technologies, such as generative artificial intelligence, and it expects its
use of these technologies to increase over time. However, there are
significant risks involved in utilising more sophisticated modelling
approaches, including artificial intelligence, and no assurance can be
provided that NWB Group's use of artificial intelligence in its models will
enhance its business or produce only intended or beneficial results. NWB 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 NWB 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 (and in particular, NWB Group's) regulators
(including as part of NatWest Group's mandated stress testing), increased
capital requirements, rendering some business lines uneconomical, requiring
management action or subjecting NWB Group to regulatory sanction, any of which
in turn may also have an adverse effect on NWB Group and its customers.

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

NWB 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 NWB 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.
Refer to 'There are significant limitations related to accessing accurate,
reliable, verifiable, auditable, consistent and comparable climate and
sustainability-related data that contributes to substantial uncertainties in
accurately assessing, managing and reporting on climate and
sustainability-related information and risks, as well as making informed
decisions.'

Accounting policies deemed critical to NWB 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 2025, these include loan impairments, fair value, deferred tax,
and investment in Group undertakings (parent company only). These are set out
in 'Critical accounting policies'.

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

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

NWB Group prepares its consolidated financial statements in conformity with
the requirements of the Companies Act 2006 and in accordance with UK-adopted
IAS and IFRS as issued by the International Accounting Standards Board.
Changes in accounting standards or guidance by accounting bodies and/or
changes in accounting standards requirements by regulatory bodies or in the
timing of their implementation, whether immediate or foreseeable, could result
in NWB Group having to recognise additional liabilities on its balance sheet,
or in further write-downs or impairments to its assets, and could also have an
adverse effect on NWB Group. Additionally, auditors may have different
interpretations of these accounting standards, and any change of auditor may
lead to unfavourable changes in NWB Group's accounting policies.

From time to time, the International Accounting Standards Board may also issue
new accounting standards or interpretations that could materially impact how
NWB Group calculates, reports and discloses its financial results and
financial condition, and which may affect NWB Group's 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 NWB Group are discussed in 'Future accounting developments'.

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

The value or effectiveness of any credit protection that NatWest Group
(including NWB Group) has acquired depends on the value of the underlying
assets and the financial condition of the insurers and counterparties.

The value or effectiveness of any credit protection that NatWest Group
(including NWB Group) has acquired, including credit default swaps (CDSs),
significant risk transfer (SRT) transactions, credit risk insurance (CRI), and
financial guarantees (FG) depends on the value of the underlying assets and
the financial condition of the insurers, counterparties and protection
providers, and prevailing market spreads. Although extensive assessments are
undertaken prior to execution, there can be no assurance that such protection
will remain effective or enforceable, and any failure could adversely impact
NWB Group's risk profile, capital position and reputation.

For CDS, changes in credit spreads, deterioration in counterparty
creditworthiness, the outcome of determination committees, or disputes over
contractual terms may result in valuation adjustments, impairments or
increased collateral requirements, creating potential liquidity pressures. For
SRT transactions, the anticipated capital relief is subject to ongoing
regulatory recognition and the performance of the securitised portfolio. Any
deterioration in asset quality, structural breaches, operational errors or
changes in regulatory interpretation could reduce or eliminate the expected
benefit. These transactions also introduce counterparty and model risk. For
CRI, the enforceability of policies and the financial strength of insurers are
critical. Disputes over coverage, policy exclusions, delays in claims
settlement or insurer default could result in losses not being mitigated as
intended. Concentration risk may arise where protection is sourced from a
limited number of insurers, increasing vulnerability to sector-wide stress.

As with other forms of credit protection, fluctuations in fair value or
deterioration in the financial condition or perceived creditworthiness of
counterparties and insurers may lead to additional valuation adjustments or
impairments. Any such developments or fair value changes may have a material
adverse effect on NatWest Group (including NWB Group).

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

NatWest Group (including NWB Group) may become subject to the application of
UK statutory stabilisation or resolution powers which may result in, for
example, the write-down or conversion of NWB Group's Eligible Liabilities.

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 NWB Group, as a 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.

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 (including NWB
Group), which may depend on factors outside of NWB 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, there may be a corresponding material adverse effect
on NWB Group's future results, financial condition, prospects, and/or
reputation.

NatWest Group, and NWB Group, could be adversely affected if NatWest Group
fails to meet the requirements of regulatory stress tests, or if its
resolution preparations are deemed inadequate.

NatWest Group is subject to annual and other stress tests by its regulator in
the UK. Stress tests are designed to assess the resilience of banks such as
NWB 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 the NWB 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 (including NWB Group).

NatWest Group is also 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. In August 2024, the BoE communicated its
assessment of NatWest Group's preparations for a potential resolution scenario
and did not identify any areas for further enhancement, shortcomings,
deficiencies or substantive impediments. NatWest Group, and in turn NWB, 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 reveals 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 (and NWB Group) as, depending on the BoE's
assessment, potential action may include, but is not limited to, restrictions
on 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, and/or to maintain a
specified amount of MREL. This may also impact NatWest Group's (and NWB
Group's) strategic plans.

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

Operational and IT resilience risk

Operational risks (including reliance on third party suppliers and outsourcing
of certain activities) are inherent in NWB 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. NWB Group offers 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 NWB Group's compliance
with financial crime requirements.

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; 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 NWB Group's ability to maintain
effective internal controls and governance frameworks.

Financial crime continues to evolve, whether through fraud, scams,
cyberattacks or other criminal activity. These risks are exacerbated as NWB
Group continues to innovate its product offering and increasingly offers
digital solutions to its customers, including through mobile banking.
Financial crime assessment, systems and controls, internal stress tests and
models are critical to financial crime risk management. 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. Weak or
ineffective financial crime processes and controls may risk NWB Group
inadvertently facilitating financial crime which may result in regulatory
investigation, sanction, litigation, fines and/or reputational damage.
Further, failure to manage these risks effectively, or within regulatory
expectations, could adversely affect NWB Group's reputation or its
relationship with its regulators, customers or other stakeholders. See 'NWB
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 NWB Group.' These risks are also exacerbated when NWB Group
relies on critical service providers (suppliers) or vendors to provide
services to it or its customers, as is increasingly the case as NWB Group
outsources certain activities, including with respect to the implementation of
technologies, innovation (such as cloud-based services and artificial
intelligence) and responding to regulatory and market changes.

NWB 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 NWB Group's current
solutions, systems and controls.

 NWB Group increasingly provides certain shared critical services and
operations, including, without limitation, property, technology, finance,
accounting, treasury, legal, risk, regulatory compliance and reporting,
financial crime, human resources, and certain other support and administrative
functions to other entities within NatWest Group (in particular, NWM Plc) and
receives income in respect of these services. As a result, NWB Group may be
exposed to a loss of income if these services are not required to the same
extent, or are no longer required at all.

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

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

NWB 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 (including NWB Group) and against NatWest Group and NWB
Group's supply chain networks, reinforcing the importance of due diligence of,
ongoing risk management of, and a close working relationship with, the third
parties on which NWB Group relies. NWB 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. The increased
availability of malicious tools and the rapid advancement of artificial
intelligence capabilities reduce entry barriers for malicious actors and
accelerate the exploitation of vulnerabilities leading to cyberattacks
evolving and becoming more sophisticated. As a result, NWB Group is required
to continue to invest significant resources in additional capability designed
to defend against a variety of existing and 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 NWB Group. For
example, in 2025, NWB 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 NWB Group's customers. Consequently, NWB 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 'NWB Group's operations
are highly dependent on its complex IT systems and any IT failure could
adversely affect NWB Group.'

Any failure in NWB 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, but not limited to costs
relating to notification of, or compensation to customers, credit monitoring
or card reissuance), result in regulatory investigations or sanctions being
imposed, or may affect NWB 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 NWB Group's
counterparties and suppliers may also have an adverse effect on NWB Group's
operations.

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

NWB 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 NWB Group. Due to NWB 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 NWB Group.

In accordance with applicable UK and EU data protection, and cybersecurity
laws and regulations, NWB Group is required to ensure it implements timely,
appropriate and effective organisational and technological safeguards against
unauthorised or unlawful access to the data of NWB Group, its customers and
its employees. In order to meet this requirement, NWB 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 NWB
Group interacts. As NatWest Group develops new artificial intelligence-based
products, proprietary, sensitive or confidential NWB Group customer
information may be inputted into third-party generative or other artificial
intelligence or machine learning platforms, and could potentially be accessed
by others, including if such information is used to train third-party
artificial intelligence models. This may increase the risk of data leakage,
data poisoning, potential bias, discrimination, errors and misuse. A failure
to monitor and manage data in accordance with applicable requirements may
result in financial losses, regulatory fines, investigations and litigation,
and associated reputational damage.

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

 

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

NWB 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 NWB
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 NWB 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 NWB 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 NWB Group's future
results, financial condition, prospects, and/or reputation.

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

NWB 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
(including NWB 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
their branches and main data processing centres, is critical to NWB Group's
operations. NWB Group's reliance on a limited number of cloud services
providers increases its exposure to disruption events affecting these cloud
services providers.

Individually or collectively, whether operated by NWB Group or by a third
party supplier, 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 NWB Group; and (ii) NWB 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 NWB
Group's regulatory approvals, competitive position, business and brands, which
could undermine its ability to attract and retain customers and talent.

NWB 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. NWB Group uses
IT systems that enable remote working interface with third-party systems, and
NWB Group could experience service denials or disruptions if such IT systems
exceed capacity or if NWB 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. Hybrid working
arrangements for NWB Group employees place heavy reliance on the IT systems
that enable remote working and may place additional pressure on NWB Group's
ability to maintain effective internal controls and governance frameworks and
increase operational risk.

In 2025, NWB 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 and risk-based removal of
technology obsolescence). NWB 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 poor design or implementation, defects or otherwise, may
adversely affect NWB 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 NWB Group's future
results, financial condition, prospects, and/or reputation.

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

NWB Group's success depends on its ability to attract, retain, and develop a
highly skilled and qualified diverse workforce, including senior management,
and other employees in critical roles (such as in technology, artificial
intelligence and data), in a highly competitive market.

NWB Group's ability to attract, retain and develop highly skilled and
qualified diverse senior management and personnel may be more difficult due to
heightened regulatory oversight of banks compared to firms outside of banking
and ongoing restrictions on employee compensation arrangements, particularly
in the EU. In addition, certain economic, market and regulatory conditions 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 workforce and inclusive work
environment may adversely affect NWB Group's employee engagement and the
execution of its strategy, and could also have an adverse effect on its
reputation with employees, customers, investors and regulators.

NWB 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 NWB Group.

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.

Many of NWB 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 NWB Group in maintaining good employee relations.
Any failure to do so may adversely affect NWB Group's ability to operate its
business effectively.

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

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

Risk management is a fundamental component of NWB Group's operations and is
critical to the effective delivery of its long-term strategic objectives. NWB
Group operate within NatWest Group's Enterprise-Wide Risk Management Framework
('EWRMF'), which sets out the approach for risk management and outlines key
principles for sound risk governance and setting of risk appetite with respect
to: financial risk (capital risk, liquidity and funding risk, credit risk,
traded market risk, non-traded, market risk, pension risk, earning stability
risk) and non-financial risk (model risk, reputational risk, financial crime,
operational risk, compliance and conduct risk). Non-compliance with this
framework, including deviations from risk appetite, or any significant
shortcomings in related controls and procedures, may have a detrimental effect
on NatWest Group's financial condition, strategic delivery, or result in
inaccurate reporting of risk exposures.

NWB Group promotes a risk-aware culture and invests in policies and resources
to manage risks. However, these measures may not entirely prevent a failure in
NatWest Group's risk management framework within which NWB Group operates. For
example, instances of misconduct may arise from: business decisions, actions
or reward mechanisms that fail to comply with NWB Group's regulatory
obligations, do not adequately address customers' needs, or are misaligned
with NWB Group's strategic objectives; 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. Any failure in the EWRMF may result in the
inability for NWB Group to achieve its strategic objectives for its customers,
employees and wider stakeholders.

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

NWB Group's operations are subject to inherent reputational risk. Reputational
risk relates to stakeholder and public perceptions of NWB 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 NWB Group, its
employees or those with whom NWB Group is associated.

 

Refer to, 'NWB Group's businesses are subject to substantial regulation and
oversight, which are constantly evolving and may adversely affect NWB Group.'
This includes harm to its brand, which may be detrimental to NWB 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 NWB Group's ability to attract and retain customers. In particular, NWB
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 NWB Group or
any other member of NatWest Group conducts or modifies its business activities
and operations, media coverage (whether accurate or otherwise), employee
misconduct, NWB Group's financial performance, IT systems failures or
cyberattacks, data breaches, financial crime and fraud, 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 NWB 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 NWB Group's future results, financial condition, prospects, and/or
reputation.

Legal and regulatory risk

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

NWB 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 presents 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. NWB 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 refining the prudential
regulation within the financial services industry and enhancing the way
financial services are conducted, with the dual aim of fostering greater
competition and supporting sustainable growth. Forthcoming measures include
enhanced capital, liquidity and funding requirements, through future
implementation of the Basel 3.1 standards (and any resulting effect on RWAs
and models).

This is in addition to previous measures, such as: 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, financial market infrastructure
reforms, enhanced regulations in respect of the provision of 'investment
services and activities'.

There is also continued 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 and digital assets, 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 reviewing 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 NWB 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 NWB Group include, but
are not limited to:

-    general changes in government, regulatory, competition, or central
bank policy (including as a result of the Bank Resolution (Recapitalisation)
Act 2025), or changes in regulatory regimes that may influence investor
decisions in the jurisdictions in which NWB Group operates;

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

-    increased scrutiny including from the CMA, the FCA, and the 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;

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

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

-    increased risk of legal action against NWB Group in relation to the
remediation of defects in certain historical property developments;

-    new or increased regulations relating to data protection as well as IT
controls and resilience;

-    the introduction of, and changes to, taxes, levies or fees applicable
to NWB 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;

-    increased innovation in private digital asset propositions, such as
stablecoin or tokenised deposits, which may challenge traditional payment
methods and have other potential adverse effects on UK banks (such as higher
funding costs or a reduced deposit base);

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

-    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;

-    changes in policy intended to expand consumer access to retail
investment products and services, including through the introduction of
targeted support;

-    reforms to the Consumer Credit Act 1974 and the Financial Ombudsman
Service;

-    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 NWB
Group's authorisations and licences, the products and services that it may
offer, its reputation and the value of its assets, NWB Group's operations or
legal entity structure, and the manner in which it conducts its business.

Material consequences could arise should NWB 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 NWB 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 (such as divergence of
regulations of digital assets and cryptocurrency), or failure by NWB Group to
comply with such laws, rules and regulations, may adversely affect NWB 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 NWB Group's
reputation, ability to engage in effective business, capital and risk
management planning.

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

NWB 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 NWB Group.

NWB 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. NWB 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 UK,
the US, Europe, and other jurisdictions.

NWB 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
setting of benchmark rates such as LIBOR and related derivatives trading,
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 NWB
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. NWB Group's expectation for resolution may change
and substantial additional provisions and costs may be recognised in respect
of any matter. For additional information relating to legal, and regulatory
proceedings and matters to which NWB 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
NWB Group's business and result in restrictions or limitations on NWB 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 NWB Group, 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 may have an adverse effect on NWB Group.
This in turn and/or any fines, settlement payments or penalties may have an
adverse effect on NWB Group. Similar consequences could result from legal or
regulatory actions relating to other parts of NatWest Group.

Failure to comply with undertakings made by NWB Group to its regulators may
result in additional measures or penalties being taken against NWB 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 NWB Group's operations, additional supervision by NWB Group's regulators,
and loss of investor confidence.

Any of the above may have a material adverse effect on NWB 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 NWB Group.

In accordance with the accounting policies set out in 'Critical accounting
policies', NWB 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 £55 million as at
31 December 2025. Changes to the treatment of certain deferred tax assets may
impact NWB Group's capital position.

In addition, NWB 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 NWB Group's future
results, financial condition, prospects, and/or reputation.

Climate and sustainability-related risks

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

NWB Group is subject to financial and non-financial risks associated with
climate change, nature-related and social matters (together
sustainability-related matters). These matters impact NWB Group directly
through its own operations and employees, and indirectly through its value
chain including its investors, customers, counterparties and suppliers, and
business partners (collectively, our 'Value Chain'), and business activities.

Financial and non-financial risks from climate change can arise through
physical and transition risks. In addition, NWB Group may also be exposed to
legal, regulatory or financial consequences arising from NWB Group's actions
or omissions related to climate and sustainability-related matters, giving
rise to liability risk.

Climate-related physical risks are associated with increasing frequency and
intensity of extreme weather events, including floods, wildfires and changes
in climate conditions. Such events can impact employee health and safety,
negatively impact local communities where NWB Group operates, damage assets,
property and infrastructure, and disrupt operations and supply chains,
resulting in changes in asset value, deterioration of the value of collateral
or insurance shortfalls and increased costs and credit defaults. This can
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 while simultaneously increasing NWB Group's own
operational costs and exposing it to potential business continuity challenges.
In addition, NWB Group's premises and operations, or those of its critical
outsourced functions, may experience damage or disruption leading to increased
costs for NWB Group.

Climate-related transition risks arise from the UK's and global economies'
shift to net zero. The pace and nature of transition-whether orderly or
disorderly-depends significantly on timely and appropriate government policy
and regulatory changes, immediate actions from national and regional
governments, new technological innovation, changes to supply and demand
systems within industries, customer 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. This could
adversely impact profitability, market stability and the resilience of
financial institutions, including NWB Group. In addition, the transition may
affect NWB Group's customers and businesses across sectors in different ways
and at different levels of risk These timeframes are considerably longer than
NWB Group's historical and current strategic, financial, resilience and
investment planning horizons.

Transition risks may also trigger reputational and liability exposures,
especially if NatWest Group (including NWB Group), is perceived as not meeting
its climate ambitions, targets and commitments, or not making progress against
NatWest Group's climate transition plan.

Moreover, beyond climate change, NWB Group and its Value Chain may face
financial and non-financial risks arising from acute or chronic nature-related
physical risks, (such as wildfires, pollution, water stress and loss of
biodiversity), nature-related transition risks (such as risk arising directly
or indirectly due to changes in policy, market and technology, changes in
perception concerning an organisation's actual or perceived nature impacts and
from legal claims) and social issues (such as data protection and privacy,
impact of increased adoption of artificial intelligence technology, human
rights abuse, conflict and security, land rights, labour rights and unjust
working conditions, modern slavery and child labour, discrimination and lack
of support for the vulnerable, negative impact on people's standard of living
and health, inequality, accessible banking and financial inclusion, and
financial crime).

There are heightened regulatory expectations, growing scrutiny from investors,
civil society, and other external stakeholders, with businesses being
increasingly expected to be transparent about their efforts to identify,
assess, mitigate and manage nature-related and social risks. NWB Group may
face reputational, regulatory non-compliance and litigation risks if it is
directly or indirectly linked to adverse nature-related or social impacts and
fails to adequately manage the risks associated with those impacts.

Climate and sustainability-related risks are inter-linked and may (i)
adversely impact the broader economy-affecting interest rates, inflation and
growth-which in turn may reduce profitability and financial stability; (ii)
adversely impact asset pricing and valuations of NWB Group's and other
securities, potentially triggering wider disruptions across the financial
system; (iii) adversely impact 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; (iv) result in losses
from liability or reputational damage, such as negative media, activist
pressure, or public criticism, if NWB Group or its Value Chain are linked to
adverse climate or sustainability-related impacts; and (v) may intensify
existing exposures across multiple risk categories, including credit,
operational (e.g. business continuity), market and liquidity, model,
reputational, regulatory compliance, conduct and pension risks.

Failure by NWB Group to timely identify, assess, mitigate and manage climate
and sustainability-related risks, as well as failure to respond to emerging
opportunities, evolving regulatory requirements, and shifting market and
external expectations, may have a material adverse effect on NWB Group's
business, financial condition, future results, access to finance, cost of
capital, reputation, and the value of its securities.

NatWest Group's (including NWB Group) strategy relating to climate and
sustainability is subject to execution and reputational risks. NatWest Group's
(including NWB Group) climate and sustainability-related ambitions, targets
and commitments may not be achieved, and NatWest Group's climate transition
plan may not be implemented, without timely and appropriate government policy,
technology developments, and suppliers, customers and society supporting the
transition.

NatWest Group has an ambition to be net zero across its financed emissions,
assets under management and operational value chain by 2050. NatWest Group
also has an ambition at least to halve the climate impact of its financing
activity by 2030, against a 2019 baseline, supported by portfolio-level,
activity-based targets.

NatWest Group may also announce other climate and sustainability-related
ambitions, targets and commitments and may withdraw, retire, amend, replace or
supersede existing ones from time to time, whether or not they have been
achieved, where it considers this to be appropriate having regard to its
strategic objectives, or where required or appropriate to do so by applicable
law, regulation or supervisory expectations.

NWB Group's ability to contribute to achieving NatWest Group's climate and
sustainability-related ambitions, targets and commitments and to contribute to
implementing NatWest Group's climate transition plan, may require NWB Group to
make changes to its business, operating model, existing exposures, and
products and services. This may include reducing its estimated financed
emissions and discontinuing certain activities over time. NatWest Group
(including NWB Group) acknowledge that (i) emission reductions are unlikely to
be linear; (ii) UK Parliament will set a new legal limit on greenhouse
emissions as part of the Seventh Carbon Budget in June 2026 which may have an
impact on the achievement of NatWest Group's (including NWB Group) climate and
sustainability-related ambitions, targets and commitments, and the
implementation of NatWest Group's climate transition plan; and (iii) 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.

NWB Group's ability to contribute to achieving NatWest Group's strategy,
including its climate and sustainability-related ambitions, targets and
commitments and to contribute to implementing NatWest Group's climate
transition plan is dependent on many factors and uncertainties beyond NWB
Group's control. These include (but are not limited to): (i) the extent and
pace of climate change, including the timing and manifestation of physical and
transition risks and nature loss; (ii) the macroeconomic environment; (iii)
the effectiveness of actions of governments, legislators, regulators and
businesses; (iv) the response of wider society, NWB Group's Value Chain and
other stakeholders to mitigate the impact of climate, and
sustainability-related risks; (v) changes in customer and societal behaviour
and demand; (vi) availability of commercially viable opportunities in
sustainable finance markets, competition dynamics, capital markets appetite,
investor expectations, and external credit and concentration risk appetites
which may constrain the scale or risk profile of opportunities accessible to
NWB Group; (vii) developments in 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 may make it complex for NWB
Group to contribute to achieving NatWest Group's climate and
sustainability-related ambitions, targets and commitments, and to contribute
to implementing NatWest Group's climate transition plan and there is a risk
that some or all of NatWest Group's (including NWB Group) climate and
sustainability-related ambitions, targets and commitments may not be achieved,
or NatWest Group's climate transition plan may not be implemented within the
intended timescales, or at all. Moreover, the rising energy demand associated
with artificial intelligence workloads, whether generated internally or
through third‑party providers, may increase NatWest Group's (including NWB
Group's) own operational footprint. While NatWest Group (including NWB Group)
has taken initial steps to assess the potential impacts of increased
artificial intelligence usage, its full effects on NatWest Group's (including
NWB Group's) own operational footprint remain uncertain but could have an
adverse effect on NatWest Group (including NWB Group) achieving its climate
and sustainability-related ambitions, targets and commitments and the
implementation of NatWest Group's climate transition plan.

Any delay or failure by NWB Group in putting into effect, making progress
against, or contributing to achieving NatWest Group's climate and
sustainability-related ambitions, targets and commitments, and to contributing
to the implementation of NatWest Group's climate transition plan may have a
material adverse effect on NWB Group's future results, financial condition,
prospects, and/or reputation and may increase the climate and
sustainability-related risks NWB Group faces.

There are significant limitations related to accessing accurate, reliable,
verifiable, auditable, consistent and comparable climate and
sustainability-related data that contribute to substantial uncertainties in
accurately assessing, managing and reporting on climate and
sustainability-related information and risks, as well as making informed
decisions.

NWB Group's ability to assess, manage, and report climate and
sustainability-related impacts, risks, and opportunities, including the
effective measurement, governance and reporting of progress against our
climate and sustainability-related ambitions, targets and commitments, and the
implementation of NatWest Group's climate transition plan heavily depends on
the availability of accurate, reliable, verifiable, auditable, consistent and
comparable internal and external data from customers, counterparties,
suppliers, and third parties. Our internal data on customer groups, which is
used to source financial exposure and emissions data, and the systems and
controls supporting our non-financial reporting are considerably less
sophisticated than those data, systems and controls used for financial
reporting, and continue to involve manual processes. These factors may
increase the risk of inaccuracies or gaps in our non‑financial reporting,
which could adversely affect our ability to meet regulatory, investor or
stakeholder expectations. In the absence of accurate, reliable, verifiable,
auditable, consistent and comparable data, NWB Group may rely on estimates,
proxies, or third-party methodologies-such as sectoral averages or aggregated
emissions data-that may be outdated, prepared using varying assumptions, or
not accurately reflect specific counterparties or customers. These limitations
can affect the reliability of disclosures, including financed and facilitated
emissions, and may hinder decision-making, risk management, regulatory
compliance, and data consolidation. This may result in misjudging progress
against climate ambitions, targets and commitments, misallocating capital, or
underestimating financial and reputational risks, while also reducing
comparability across institutions and increasing scrutiny from stakeholders
and regulators.

NWB Group's assessment of climate and sustainability-related impacts, risks,
and opportunities is expected to evolve as data quality and methodologies
improve. Current data gaps, limitations, and reliance on estimates or
third-party inputs may materially impact NWB Group's ability to make informed
decisions on climate and sustainability-related matters, manage risks, comply
with disclosure requirements, and monitor progress against NatWest Group's
climate and sustainability-related ambitions, targets and commitments, and the
implementation of NatWest Group's climate transition plan. As a result,
climate and sustainability-related disclosures may be amended, updated, or
restated from time to time as methodologies, data quality or regulatory
expectations evolve. NWB Group does not undertake to restate prior disclosures
except as required by applicable law or regulation, even where subsequently
available data or methodologies differ from those used at the time of the
original disclosure.

Climate risks are inherently forward-looking and complex to model. The lack of
historical data, evolving scientific understanding, and immature measurement
frameworks introduce significant uncertainty into scenario analysis and
financial forecasting. The outputs of climate risk modelling-such as emissions
pathways and reduction targets-are subject to long timeframes and assumptions
that differ significantly from traditional financial planning cycles.

NWB Group's internal capabilities to assess, model, report on and manage
climate and sustainability-related risks continue to evolve. However, even
when such capabilities are suitably developed, the high level of uncertainty
regarding any assumptions modelled, the highly subjective nature of risk
measurement and mitigation techniques coupled with persistent data gaps may
result in 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 NWB Group's business,
future results, financial condition, prospects, reputation and the price of
its securities.

NWB Group is subject to an increasingly complex and evolving landscape of
climate and sustainability-related legal, regulatory, and supervisory
expectations and there is an increasing risk of regulatory non-compliance,
investigations, litigation, and enforcement actions.

NWB Group is subject to an increasingly complex and evolving landscape of
climate and sustainability-related legal, regulatory, and supervisory
expectations, which may vary significantly and remain fragmented across the
UK, EU, US, and other jurisdictions in which NWB Group operates. This growing
divergence creates legal and operational uncertainty, may expose NWB Group to
conflicting legal and regulatory requirements, and may increase the risks of
regulatory non-compliance, regulatory enforcement and reputational damage.

The growing politicisation and polarisation of climate and
sustainability-related matters across jurisdictions may further exacerbate
existing risks and result in reduced market access, adverse public perception,
or stakeholder disengagement. Customers, investors, or stakeholders may choose
not to engage with NWB Group if they perceive NatWest Group's (including NWB
Group) strategy in relation to climate and sustainability, as either lacking
ambition or progress, or conversely, as overly focused on sustainability, or
if they object to specific climate or sustainability related decisions or
sectoral policies adopted by NatWest Group (including NWB Group), which may
adversely affect customer relationships, investor sentiment or stakeholder
engagement. For example, financing the transition of hard-to-abate sectors may
be viewed by some as misaligned with climate goals, potentially resulting in
reputational damage.

At the same time, regulatory and enforcement approaches to climate and
sustainability-related matters are increasingly diverging and, in some cases,
conflicting across jurisdictions. While some authorities are advancing
stricter requirements, others are introducing sanctions targeting institutions
that pursue climate and sustainability-related initiatives. Furthermore, NWB
Group may face litigation, complaints or other forms of challenge from
shareholders, customers, campaign groups or other stakeholders arising from
allegations of actual or perceived environmental or social harm, including
climate-related impacts, nature-related degradation, human rights abuses, or
deficiencies in governance and due diligence practices. At the same time, NWB
Group may face contradictory legal or regulatory action asserting that it has
placed undue or disproportionate focus on climate and sustainability‑related
considerations.

Failure by NWB Group to comply with evolving legal and regulatory
requirements, or supervisory expectations-including divergent and fragmented
frameworks across jurisdictions, where relevant-may increase the risk of
regulatory non-compliance, may adversely impact NWB Group's ability to
contribute to achieving NatWest Group's climate and sustainability-related
ambitions, targets and commitments, and to contribute to implementing NatWest
Group's climate transition plan, and may adversely impact its investor base
and reputation. It may also result in regulatory non-compliance
investigations, litigation and enforcement actions, which in turn may have a
material adverse effect on NWB Group's business, future results, financial
condition, prospects, reputation, and the price of its securities.

Legal Entity Identifier: 213800IBT39XQ9C4CP71

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