REG - Nat.Westminster Bk - National Westminster Bank Plc 2024 Annual Report

NatwestAnnouncement

14/02/2025 09:15

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250214:nRSN1150Xa&default-theme=true

RNS Number : 1150X  National Westminster Bank PLC  14 February 2025

 

 

 

 

 

 

 

 

National Westminster Bank Plc 14 February 2025

 

Annual Report and Accounts 2024

Pillar 3 Report 2024

 

A copy of the Annual Report and Accounts 2024 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 2024 Pillar 3 report, available on our website. For
further information, please contact:

 

For further information, please contact: Media Relations

+44 (0) 131 523 4205

 

Investor relations Claire Kane Investor Relations

+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 2024 in full unedited text. Page references in the text
refer to page numbers in the Annual Report and Accounts 2024.

 

Principal Risks and Uncertainties

Set out below are certain risk factors that could have a material adverse
effect on 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, 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 levies),
supply chain disruption, protectionist policies or trade barriers (including
tariffs).

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

NWB Group is also exposed to risks arising out of geopolitical and other
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,
more severe and frequent extreme weather events, widespread public health
crises, and the responses to any of the above scenarios by various governments
and markets.

In recent years, the UK has experienced significant political uncertainty. NWB
Group may also 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 2024, and
forward rates suggest that interest rates will continue to decline in 2025.
Stable interest rates support more predictable income flow and less volatility
in asset and liability valuations, although persistently low and negative
interest rates may adversely affect 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, and
the US Federal Reserve) and political or market events, which are outside NWB
Group's control, may lead to sharp and sudden 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.

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

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

HM Treasury has indicated that it intends to respect the commercial decisions
of NatWest Group and that NatWest Group entities (including NWB Group) will
continue to have their own independent board of directors and management team
determining their own strategy. However, for as long as HM Treasury remains
NatWest Group plc's largest single shareholder, HM Treasury and UK Government
Investments Limited ('UKGI') (as manager of HM Treasury's shareholding) could
exercise, or be perceived as being capable of exercising, influence over
NatWest Group (including NWB Group) including: changes to NatWest Group's
(including NWB Group) directors and senior management, NatWest Group's
(including NWB Group) capital strategy, dividend policy, remuneration policy
or the conduct by NatWest Group's (including NWB Group) of its operations. HM
Treasury or UKGI's approach largely depends on government policy, which could
change. Any exercise of such influence, or the perception that such influence
may be exercised, may have an adverse effect on NatWest Group, which may in
turn adversely affect the governance, business strategy, future results,
financial condition and/or prospects of NWB Group.

The way in which HM Treasury or UKGI exercises HM Treasury's rights as the
largest single shareholder of NatWest Group could give rise to conflicts
between the interests of HM Treasury and the interests of other shareholders,
including as a result of a change in government policy. In addition, NWB Plc
is a wholly owned subsidiary of NatWest Group plc, and NatWest Group plc
therefore controls NWB Group's board of directors, corporate policies and
strategic direction. The interests of NatWest Group plc as an equity holder
and as NWB Group's parent may differ from the interests of NWB Group or of
potential investors in NWB Group's securities.

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, bank-wide 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 disruption in society driven by
technology and changing customer expectations. Further, shifting trends
including digitalisation, decarbonisation, automation, artificial
intelligence, e-commerce and hybrid working, have resulted in significant
market volatility and change. There is also increasing investor, employee,
stakeholder, regulatory and customer scrutiny regarding how businesses address
these changes and related environmental challenges, including climate change,
biodiversity and other sustainability issues, (such as, how NatWest Group
supports its customers' transition to net zero, is tackling inequality,
working conditions, workplace health, safety and wellbeing, diversity and
inclusion, data protection and management, workforce management, human rights
and supply chain management).

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, 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;

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

-    changes to the regulatory environment and associated requirements
which could lead to shifts in operating cost and regulatory capital
requirements, that impact 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;

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

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

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

 

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

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 10 January 2027, non-EU firms providing 'banking services' will be
required to apply for and obtain authorisation to operate as third country
branches in each relevant EU member state where they provide these services,
unless an exemption applies. NatWest Group continues to evaluate its EU
operating model, making adaptations as necessary. Changes to, or uncertainty
regarding, 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 further costs and/or regulatory sanction due to a failure to receive the
required regulatory permissions and/or further changes to NatWest Group's
business operations, product offering, customer engagement, and regulatory
requirements.

Each of these risks, and others identified in this section entitled 'Principal
Risks and Uncertainties', individually or collectively could jeopardise the
implementation and delivery of NatWest Group's strategy, impact 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
larger banks or financial institutions or other larger entities offering
financial services products (including those that emerge from mergers and
consolidations, as well as retail and technology conglomerates). These
competitors may have more bargaining power in negotiations than NatWest Group
(or NWB Group), and therefore may be in a position to extract more
advantageous terms than NatWest Group (and NWB Group). See also, 'NWB Group
operates in markets that are highly competitive, with competitive pressures
and technology disruption'.

NatWest Group (of which NWB Group forms part), may pursue these transactions
and initiatives to, amongst others: (i) enhance capabilities that may lead to
better productivity or cost efficiencies; (ii) acquire talent; (iii) pursue
new products or expand existing products; and/or (iv) enter new markets or
enhance its presence in existing markets. In pursuing its strategy, 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 discover certain contingent or
undisclosed liabilities in businesses that it acquires, or its due diligence
to discover any such liabilities may be inadequate; and (vi) not obtain
necessary regulatory and other approvals (or onerous conditions may be
attached to such approvals). Accordingly, NatWest Group (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.

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

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

As a result, this may have a material adverse effect on NatWest Group's
(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
climate-related targets (including its climate and sustainable funding and
financing targets) and customer satisfaction targets.

NWB Group's ability to meet NatWest Group and NWB Group's respective
ambitions, targets and 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. See also '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. NWB
Group's lending strategy and associated processes and systems may fail to
identify, anticipate or quickly react to weaknesses or risks in a particular
sector, market, borrower or counterparty, or NatWest Group's credit risk
appetite relative to competitors, or fail to appropriately value physical or
financial collateral. This may result in increased default rates or a higher
loss given default for loans, which may, in turn, impact 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. 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, 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. In addition, the level of household indebtedness
(on a per capita basis) in the UK remains high. The ability of households and
businesses to service their debts could be worsened by a period of high
unemployment, or high interest rates or inflation, particularly if prolonged.

NWB Group may be affected by volatility in property prices (including as a
result of UK political or economic conditions) given that NWB Group's mortgage
loan portfolio as at 31 December 2024, amounted to £197.1 billion,
representing 58% of NWB Group's total loan exposure.

If property prices in the UK were to weaken this could lead to higher
impairment charges, particularly if default rates also increase. In addition,
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. See also, '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. Going forward,
NWB Group anticipates observable credit deterioration of a proportion of
assets resulting in a systematic uplift in defaults, which is mitigated by
those economic assumption scenarios being reflected in the Stage 2 ECL across
portfolios, along with a combination of post model overlays in both wholesale
and retail portfolios reflecting the uncertainty of credit outcomes. See also,
'Risk and capital management - Credit Risk'. A credit deterioration would also
lead to RWA increases. Furthermore, the assumptions and judgements used in the
MES and ECL assessment at 31 December 2024 may not prove to be adequate
resulting in incremental ECL provisions for 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'), the Coronavirus
Business Interruption Loan Scheme ('CBILS') and the Coronavirus Large Business
Interruption Loan Scheme ('CLBILS') 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, CBILS or CLBILS or the enforcing or pursuing
repayment of BBLS, CBILS and CLBILS (or a failure to exercise forbearance),
which may have an adverse effect on 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 operates in markets that are highly competitive, with 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 resulting from mergers between these entities), fintech
companies, large technology conglomerates and new market entrants who could
look to scale technology and/or other competitive advantages to compete with
NWB Group for customer engagement. "BigTech" companies are seen as threats to
incumbent banking providers because of their customer innovation and global
reach. In addition, digital-first banks (often referred to as "neobanks") and
fintechs are aiming to compete with incumbent banking providers on the basis
that customers increasingly use a constellation of providers to support their
complex and evolving needs (e.g., personal financial management and paying for
goods and services in foreign currency).

NWB Group expects competition to continue and intensify in response to various
trends including: evolving customer behaviour, technological changes
(including digital currencies, stablecoins and the growth of digital banking),
competitor behaviour, new market entrants, competitive foreign exchange
offerings, industry trends resulting in increased disaggregation or unbundling
of financial services or, conversely, the re-intermediation of traditional
banking services, and the impact of regulatory actions, among others. In
particular, NWB Group may be unable to grow or retain its market share due to
new (or more competitive) banking, lending and payment products and services
that are offered by rapidly evolving incumbents and challengers (including
shadow banks, alternative or direct lenders and new entrants). These
competitive pressures and the introduction of disruptive technology may result
in a shift in customer behaviour and impact 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 Mettle, Rooster Money, Boxed and Cushon), may not be successful or
may not result in NWB Group offering innovative products and services in the
future. Furthermore, current or future competitors may be more successful than
NWB Group in implementing technologies for delivering products or services to
their customers, which may adversely affect its competitive position. In
addition, continued consolidation and/or technological developments in the
financial services industry could result in the emergence of new competitors
or NWB Group's competitors gaining greater capital and other resources,
including the ability to offer a broader, more attractive and/or better value
range of products and services and geographic diversity. For example, new
market entrants, including non-traditional financial services providers, such
as retail or technology conglomerates, may have competitive advantages in
scale, technology and customer engagement and may be able to develop and
deliver financial services at a lower cost base.

NWB Group may also fail to identify future opportunities, or fail to derive
benefits from technological innovation, changing customer behaviour and
changing regulatory demands. Competitors may be better able to attract and
retain customers and key employees, have more effective IT systems, have
access to lower cost funding and/or be able to attract deposits on more
favourable terms than 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.

If NWB Group is unable to offer competitive, attractive and innovative
products that are also profitable and released in a timely manner; it will
lose market share, incur losses on some or all of its initiatives and possibly
lose growth opportunities. For example, 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 impact on its ability to compete effectively and
maintain satisfactory returns.

Moreover, activist investors have increasingly become engaged and
interventionist in recent years, which may pose a threat to NWB Group's
strategic initiatives.

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

Any of the above may have a material adverse effect on 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 2024, NWB Plc held £343.1
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 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,
to repay borrowings as they mature, to meet its obligations under committed
financing facilities, to comply with regulatory funding requirements, to
undertake certain capital and/or debt management activities, and/or to fund
new loans, investments and businesses, or make capital distributions to
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 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 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 (via 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 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 the global economy.

As at 31 December 2024, NWB Plc's CET1 ratio was 11.4%. 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 currently targets a CET1 ratio in the range of
13-14% by 31 December 2025. NatWest Group plc's target CET1 ratio is based on
a combination of its views on the appropriate level of capital and its actual
and expected regulatory requirements and internal modelling, including stress
scenarios and management's and/or the 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 and ensuring
NatWest Group meets its medium to long term targets.

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

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

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

 

-    changes in prudential regulatory requirements including 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;

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

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

 

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

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

Separately, NatWest Group may address a shortage of capital by taking action
to reduce leverage exposure and/or RWAs via asset or business disposals. These
actions may, in turn, affect: 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. See also, '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
'NWB Group may be adversely affected if NatWest Group fails to meet the
requirements of regulatory stress tests'.

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 to its
ultimate parent, NatWest Group 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 Group 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
Group's future results, financial condition, prospects, and reputation. See
also, 'NWB Group may not meet the prudential regulatory requirements for
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 disruptions and
geopolitical developments); any reduction of the UK's sovereign credit rating
and market uncertainty. In addition, credit rating agencies are increasingly
taking into account sustainability-related factors, including climate,
environmental, social and governance related risk, as part of the credit
rating analysis, as are investors in their investment decisions.

Any reductions in the credit ratings of NatWest Group plc, NWB Plc or of
certain other NatWest Group entities could significantly affect NWB Group.
Adverse consequences for NWB Group from downgrades could include, without
limitation, a reduction in the access to capital markets or in the size of its
deposit base, and trigger additional collateral or other requirements in its
funding arrangements or the need to amend such arrangements, which could
adversely affect 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 may be adversely affected if NatWest Group fails to meet the
requirements of regulatory stress tests.

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.

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

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
financial crime (criminal activities in the form of money laundering,
terrorist financing, bribery and corruption, tax evasion and sanctions as well
as external or internal fraud (collectively, 'financial crime'). 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. 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, may render some business lines
uneconomical, may require management action or may subject 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.

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 2024, these include loan impairments, fair value, and deferred
tax. 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 IFRS as
issued by the International Accounting Standards Board. Changes in accounting
standards or guidance by accounting bodies or in the timing of their
implementation, whether immediate or foreseeable, could result in 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.

From time to time, the International Accounting Standards Board may 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 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.

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.

Under the UK Banking Act 2009, the Authorities are generally required to have
regard to specified objectives in exercising the powers provided for by the UK
Banking Act 2009. One of the objectives (which is required to be balanced as
appropriate with the other specified objectives) refers to the protection and
enhancement of the stability of the financial system of the UK.

Moreover, the 'no creditor worse off' safeguard provides that where certain
resolution actions are taken, the Authorities are required to ensure that no
creditor is in a worse position than if the bank had entered into normal
insolvency proceedings. Although, this safeguard may not apply in relation to
an application of the separate write-down and conversion power relating to
capital instruments in circumstances where a stabilisation power is not also
used, the UK Banking Act 2009 still requires the Authorities to respect the
hierarchy on insolvency when using the write-down and conversion power.
Further, holders of debt instruments which are subject to the power may,
however, have ordinary shares transferred to or issued to them by way of
compensation.

Uncertainty exists as to how the Authorities may exercise their powers
including the determination of actions to be undertaken in relation to the
ordinary shares and other securities issued by NatWest Group (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 is subject to regulatory oversight in respect of resolution, and
NWB Group could be adversely affected should the BoE in the future deem
NatWest Group's preparations to be inadequate.

NatWest Group is subject to regulatory oversight by the BoE and the PRA and is
required (under the PRA rulebook) to carry out an assessment of its
preparations for resolution, submit a report of the assessment to the PRA, and
disclose a summary of this report. NatWest Group has dedicated significant
resources towards the preparation of NatWest Group for a potential resolution
scenario. In August 2024, the BoE communicated its assessment of NatWest
Group's preparations and did not identify any areas for further enhancement,
shortcomings, deficiencies or substantive impediments. NatWest Group, 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, including legal and regulatory risks, third party processes,
procedures, people or systems. 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; 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 present 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.

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

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 having been 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 the due diligence
of, ongoing risk management of, and 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. As cyberattacks
evolve and become more sophisticated, NWB Group is required to continue to
invest significant resources in additional capability designed to defend
against emerging threats.

Third parties continue to make hostile attempts to gain access to, introduce
malware (including ransomware) into, and exploit potential vulnerabilities of,
financial services institutions' IT systems, including those of NWB Group. For
example, in 2024, 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. See also, '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 costs relating to notification of, or
compensation for customers, credit monitoring or card reissuance), result in
regulatory investigations or sanctions being imposed, or may affect 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 groups or
factors such as: internal or external threat actors, human error, fraud or
malice on the part of NWB Group's employees or third parties, including third
party providers, or may result from technological failure (including
defective, inadequate or inappropriately used artificial intelligence based
solutions).

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.

A failure to monitor and manage data in accordance with applicable
requirements may result in financial losses, regulatory fines and
investigations and associated reputational damage.

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

Individually or collectively, any system failure (including defective or
inadequate automated processes or artificial intelligence based solutions),
loss of service availability, mobile banking disruption, or breach of data
security could potentially cause significant damage to: (i) important business
services across 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.

In 2024, 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). 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 cost challenges, poor 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 (through
creating an inclusive environment), and develop highly skilled and qualified
diverse personnel, including senior management, directors and key employees
(including technology and data focused roles), in a highly competitive market
and under internal cost efficiency pressures.

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

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

In addition, financial crime risk management is dependent on the use and
effectiveness of financial crime assessment, systems and controls. Weak or
ineffective financial crime processes and controls may risk NWB Group
inadvertently facilitating financial crime which may result in regulatory
investigation, sanction, litigation, fines and/or reputational damage.
Financial crime continues to evolve, whether through fraud, scams,
cyberattacks or other criminal activity. These risks are exacerbated as NWB
Group continues to innovate its product offering and increasingly offers
digital solutions to its customers, including through mobile banking.

NatWest Group (including NWB Group) has made and continues to make
significant, multi-year investments to strengthen and improve its overall
financial crime control framework with prevention systems and capabilities,
including investment in new technologies and capabilities to further enhance
customer due diligence, transaction monitoring, sanctions and anti-bribery and
corruption systems.

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

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

Hybrid working arrangements are also subject to regulatory scrutiny to ensure
adequate recording, surveillance and supervision of regulated activities, and
compliance with regulatory requirements and expectations, including
requirements to: meet threshold conditions for regulated activities; ensure
the ability to oversee functions (including any outsourced functions); ensure
no detriment is caused to customers; and ensure no increased risk of financial
crime.

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

Similarly, if NWB Group is unable to apply the appropriate product governance
processes in line with NatWest Group's (including NWB Group) strategy and
applicable legal and regulatory requirements, it may have an adverse effect on
NWB Group.

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

Any of the above may have a material adverse effect on 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. See also,
'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, the level
of direct and indirect government support, or the actual or perceived
practices in the banking and financial industry in general, or a wide variety
of other factors.

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

Although 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 represents ongoing
compliance and conduct risks. Many of these are constantly evolving and are
subject to further material changes, which may increase compliance and conduct
risks, particularly as the laws of different jurisdictions (including those of
the EU/EEA and UK) diverge. 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 reforming the prudential
regulation of the financial services industry and the way financial services
are conducted. Measures have included: enhanced capital, liquidity and funding
requirements, through initiatives such as the Basel 3.1 standards
implementation (and any resulting effect on RWAs and models), the UK
ring-fencing regime, the strengthening of the recovery and resolution
framework applicable to financial institutions in the UK, EU and US, financial
industry reforms (such as the FSMA 2023), corporate governance requirements,
rules relating to the compensation of senior management and other employees,
enhanced data protection and IT resilience requirements (such as DORA),
financial market infrastructure reforms, enhanced regulations in respect of
the provision of 'investment services and activities'.

There is also increased regulatory focus in certain areas, including conduct,
model risk governance, consumer protection in retail or other financial
markets (such as the FCA's rules governing interactions with and the provision
of services to retail customers, the 'Consumer Duty'), competition and
disputes regimes, anti-money laundering, anti-corruption, anti-bribery,
anti-tax evasion, payment systems, sanctions and anti-terrorism laws and
regulations. In addition, there is significant oversight by competition
authorities. The competitive landscape for banks and other financial
institutions in the UK, EU/EEA, US and Asia is rapidly changing. Recent
regulatory and legal changes have resulted and may continue to result, in new
market participants and changed competitive dynamics in certain key areas.
Regulatory and competition authorities, including the CMA, are also looking at
and focusing more on how they can support competition and innovation in
digital and other markets. Future competition investigations, market reviews,
or regulation of mergers may lead to the imposition of financial penalties or
market remedies that may adversely affect NatWest Group's competitive or
financial position. Recent regulatory changes and heightened levels of public
and regulatory scrutiny in the UK, EU and US have resulted in increased
capital, funding and liquidity requirements, changes in the competitive
landscape, changes in other regulatory requirements and increased operating
costs, and have impacted, and will continue to impact, product offerings and
business models.

Moreover, uncertainties remain as to the extent to which EU/EEA laws will
diverge from UK law. For example, bank regulation in the UK may diverge from
European bank regulation following the enactment of the Financial Services and
Markets Act 2023 ('FSMA 2023') and the Retained EU Law (Revocation and Reform)
Act 2023. In particular, FSMA 2023 provides for the revocation of retained EU
laws relating to financial services regulation, but sets out that this process
will likely take a number of years and the intention is that specific retained
EU laws will not be revoked until such time as replacement regulatory rules
are in place. The actions taken by regulators in response to any new or
revised bank regulation and other rules affecting financial services, may
adversely affect 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 (such as changes to the BoE levy (including as a result of the
proposed Bank Resolution (Recapitalisation) Bill), or changes in regulatory
regimes that may influence investor decisions in the jurisdictions in which
NWB Group operates;

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

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

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

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

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

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

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

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

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

-    regulatory enforcement in the form of PRA imposed financial penalties
for failings in banks' regulatory reporting governance and controls, and
ongoing regulatory scrutiny; 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;

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

-    new or increased regulations relating to financial crime; and

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

 

Any of these developments (including any failure to comply with or correctly
interpret new rules and regulations) could also have an adverse effect on 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, 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 £333 million as at
31 December 2024. 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.

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

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

Whilst there are significant uncertainties relating to the location, magnitude
and timing of climate-related physical risks, scientific research suggests
physical risks may occur in increasing frequency and severity. Climate-related
events like flood, wildfires and climatic changes can damage assets and
disrupt operations, leading to increased costs, changes in asset values and
loan defaults. Damage or disruption to NWB Group customers' and
counterparties' (including suppliers') properties, premises and operations
could disrupt business, result in the deterioration of the value of collateral
or insurance shortfalls, impair asset values and negatively impact the
creditworthiness of customers and their ability and/or willingness to pay
fees, afford new products or repay their debts, leading to increased default
rates, delinquencies, write-offs and impairment charges in NWB Group's
portfolios. 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.

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

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

Climate and nature-related risks may:

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

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

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

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

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

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

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

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

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

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

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

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

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

Increases in lending and financing activities may wholly or partially offset
some or all these reductions, which may increase the extent of changes and
reductions necessary.

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

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

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

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

Climate and sustainability matters are also becoming increasingly politicised
and polarised. Some of NWB Group's customers, investors or other stakeholders
may decide not to do business with NWB Group because, according to their own
assessment, NatWest Group's (including NWB Group) strategy, ambitions and
targets related to climate and sustainability do not meet their expectations,
either for lacking the necessary ambition or progress, or for being perceived
as overly concerned about sustainability.

Any delay or failure by NWB Group in putting into effect, making progress
against or meeting NatWest Group's climate and sustainability-related
ambitions, targets and plans 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 other
sustainability-related data that contribute to substantial uncertainties in
accurately modelling and reporting on climate and sustainability information,
as well as making appropriate important internal decisions.

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

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

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

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

Climate-related risks are challenging to model due to their forward-looking
nature, the lack of and/or quality of historical testing capabilities, lack of
accuracy, standardisation and incompleteness of emissions and other climate
and sub-sector related data and the immature nature of risk measurement and
modelling methodologies. As a result, it is very difficult to predict and
model the impact of climate-related risks into precise financial and economic
outcomes. The evaluation of climate-related risk exposure and the development
of associated potential risk mitigation techniques also largely depend on the
choice of climate scenario modelling methodology and the assumptions made
which involves a number of risks and uncertainties. Accordingly, these risks
and uncertainties coupled with significantly long timeframes make the outputs
of climate-related risk modelling, climate-related targets (including emission
reduction targets) and pathways, inherently more uncertain than outputs
modelled for traditional financial planning cycles based on historical
financial information.

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

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

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

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

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

Certain non-UK subsidiaries of NWB Group in the EU and elsewhere may also be
subject to EU, national and other climate and sustainability laws and
regulations which in some cases may differ. Divergence between UK, EU, US and
other climate and sustainability-related legal, regulatory and supervisory
requirements and their interpretation may increase the cost of doing business
(including increased operating costs) and may result in regulatory
non-compliance and litigation risk.

Failure by NWB Group to comply with these divergent legal, regulatory and
supervisory requirements (if applicable to NWB Group) may have an adverse
effect on NWB Group's ability to contribute to the successful implementation
of NatWest Group's strategy relating to climate change including when
contributing to setting up NatWest Group's climate ambitions and targets and
to executing NatWest Group's transition plan and may result in NWB Group
and/or its subsidiaries not meeting investors' expectations.

Increasing new climate and sustainability-related jurisprudence, laws and
regulations in the UK and other jurisdictions, regulatory scrutiny, expose
financial institutions, including NWB Group, to face increasing litigation,
conduct, enforcement and contract liability risks related to climate change,
nature-related degradation, human rights violations and other social,
governance and sustainability-related issues. Furthermore, regulatory and
enforcement activity around climate and sustainability initiatives that
promote more extensive sustainability-related requirements and those that
impose divestment and other sanctions against financial institutions that
implement climate and sustainability-related initiatives is becoming
increasingly divergent and conflicting between jurisdictions, in particular in
the United States. Any failure of NWB Group to develop and implement robust
and effective governance, controls and procedures over climate and
sustainability-related impact assessment, disclosure, reporting and other
communications and sustainability-related claims (including in relation to NWB
Group's products, services and strategy) and comply with them in line with
applicable legal and regulatory requirements and expectations, may give rise
to increased complaints, regulatory enforcement (including sanctions),
investigation and litigation and may adversely affect NWB Group's regulatory
compliance, investor base and reputation.

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

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

 

Legal Entity Identifier: 213800IBT39XQ9C4CP71

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACSGBGDDBUBDGUS