REG - Natwest Markets PLC NatWest Markets N.V. - NatWest Markets Plc Annual Report 2025

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13/02/2026 08:16

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RNS Number : 9269S  Natwest Markets PLC  13 February 2026

 

 

 

 

 

NatWest Markets Plc 13 February 2026

Annual Report and Accounts 2025

Pillar 3 Report 2025

 

A copy of the Annual Report and Accounts 2025 for NatWest Markets Plc will
shortly be submitted to the National Storage Mechanism and will be available
for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . The document will
be available on NatWest Group plc's website at
https://investors.natwestgroup.com/reports-archive
(https://investors.natwestgroup.com/reports-archive)

We have also published the 2025 Pillar 3 report, available on our website.

 

For further information, please contact:

 

Media Relations

+44 (0) 131 523 4205

 

Investor relations

Paul Pybus

NatWest Markets Plc

+44 (0) 207 085 6448

 

For the purpose of compliance with the Disclosure Guidance and Transparency
Rules, this announcement also contains risk factors extracted from the Annual
Report and Accounts 2025 in full unedited text. Page references in the text
refer to page numbers in the Annual Report and Accounts 2025.

 

Principal Risks and Uncertainties

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

Economic and political risk

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

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

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

NWM Group is also exposed to risks arising out of geopolitical events or
political developments that may hinder economic or financial activity levels
and may, directly or indirectly, impact UK, regional or global trade and/or
NWM Group's customers and counterparties. NWM Group's business and performance
could be negatively affected by political, military or diplomatic events,
geopolitical tensions, armed conflict (for example, the Russia-Ukraine
conflict and Middle East conflicts), terrorist acts or threats (including to
critical infrastructures), more severe and frequent extreme weather events,
widespread public health crises, and the responses to any of the above
scenarios by various governments and markets.

NWM Group may face political uncertainty in Scotland if there is another
Scottish independence referendum. Scottish independence may adversely affect
NWM Group plc both in relation to its entities incorporated in Scotland and in
other jurisdictions.

Any changes to Scotland's relationship with the UK or the EU may adversely
affect the environment in which NatWest Group plc and its subsidiaries operate
and may require further changes to NatWest Group (including NWM Group's
structure), independently or in conjunction with other mandatory or strategic
structural and organisational changes, any of which could adversely affect NWM
Group.

The value of NWM Group's own and other securities may be materially affected
by market risk (including as a result of market fluctuations). Market
volatility, illiquid market conditions and disruptions in the financial
markets may make it very difficult to value certain of NWM Group's own and
other securities, particularly during periods of market displacement. This
could cause a decline in the value of NWM Group's own and other securities, or
inaccurate carrying values for certain financial instruments. Similarly, NWM
Group trades a considerable amount of financial instruments (including
derivatives) and volatile market conditions could result in a significant
decline in NWM Group's net trading income or result in a trading loss.

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 NWM Group's counterparty risk. NWM Group's
risk management and monitoring processes seek to quantify and mitigate NWM
Group's exposure to extreme market moves. However, market events have
historically been difficult to predict, and NWM 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 NWM Group's future
results, financial condition, prospects, and/or reputation.

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

Decisions of central banks (including the Bank of England ('BoE'), the
European Central Bank ('ECB'), and the US Federal Reserve) and political or
market events which are outside NWM Group's control, may lead to unexpected
fluctuations in currency exchange rates. Although NWM Group is principally a
UK-focused banking group, it is subject to structural foreign exchange risk
from capital deployed in NWM Group and its foreign subsidiaries and branches.
NWM Group also issues instruments in non-sterling currencies, such as USD,
that assist in meeting NWM Group's regulatory requirements. In addition, NWM
Group conducts banking activity in non-sterling currencies (for example,
loans, deposits and dealing activity) which affect its revenue. NWM Group also
uses service providers based outside the UK for certain services and as a
result certain operating expenses are subject to fluctuations in currency
exchange rate. NWM 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')), income
and expenses, RWAs and hence the reported earnings and financial condition of
NWM Group.

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

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

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

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

Business change and execution risk

NWM Group has been in a period of, and may continue to be subject to,
significant structural and other change.

As part of NatWest Group's strategy (including the strategic priorities of
disciplined growth, leveraging simplification and active balance sheet and
risk management), NWM Group's own strategy has evolved to mostly focus on
serving NatWest Group's corporate and institutional customer base via the
creation of NatWest Group's C&I business segment. NatWest Group plc
reports NWM Group's results under the C&I operating segment structure,
although NWM Plc continues to also report on a standalone legal entity basis.

The C&I business segment was created to promote closer operational and
strategic alignment to support NatWest Group growth, with more integrated
services to customers across NatWest Group entities, within and outside the
ring-fenced banks with the potential increased risk of breach of the UK
ring-fencing regime requiring effective conflicts of interest policies. As a
result of further focusing on NatWest Group's core C&I customers, NWM
Group's prospects have become further dependent on the success and strategy of
NatWest Group and its C&I business segment in particular.

NWM Group's ability to serve its customers may be adversely affected by the
execution of NatWest Group's strategy in respect of its C&I business
segment and customer reactions to the changing nature of NWM Group's business
model may be more adverse than expected. Previously anticipated revenue and
profitability levels may not be achieved (including in relation to: the
ability to support customer transactions whilst meeting NWM Group capital
targets, and changes to the availability of risk capital), in the timescales
envisaged or at all. An adverse macroeconomic environment, political and
regulatory uncertainty, market volatility and change, strong market
competition, the emergence of digital assets and digital currencies operating
alongside the traditional monetary system, and/or the complexity of deployment
and integration of artificial intelligence in NWM Group's processes, controls,
and products may require NWM Group to make adjustments to its strategy or
planned implementation timeline.

NWM Group's strategy requires it to focus on bank-wide simplification, a
significant proportion of which is dependent on simplification of its IT
systems and therefore may not be realised if IT capabilities are not delivered
in line with assumptions. The scale of changes that have been concurrently
implemented require the implementation and application of robust governance
and controls frameworks and robust IT systems. There is a risk that NWM Group
may not be successful in maintaining such governance and control frameworks
and IT systems.

The financial, operational and capital targets and expectations envisaged by
NWM's strategy may not be met or maintained in the timeframes expected or at
all. In addition, targets and expectations for NWM Group are based on
management plans, projections and models, and are subject to a number of key
assumptions and judgements, any of which may prove to be inaccurate. NWM Group
has implemented a shared services model and transfer pricing arrangements with
some entities within NatWest Group's ring-fenced sub-group (including NatWest
Bank Plc and The Royal Bank of Scotland Plc). NWM Group therefore relies
directly or indirectly on NatWest Group entities to provide services to itself
and its customers. This reliance has increased as a result of NWM Group
joining NatWest Group's C&I business segment.

A failure of NWM Group to receive these services may result in operational
risk. See 'Operational risks (including reliance on third party suppliers and
outsourcing of certain activities) are inherent in NWM Group's businesses.' In
addition, any change to the cost and/or scope of services provided by NatWest
Group may impact NWM Group's competitive position and its ability to meet its
other targets.

NWM's strategy entails legal, execution, operational and regulatory (including
compliance with the UK ring-fencing regime), conflicts, IT system,
cybersecurity, culture, people, conduct, business and financial risks to NWM
Group. As a result, NWM Group may not be able to successfully implement some
or all aspects of its strategy or may not meet any or all of the related
strategic targets or expectations.

Additionally, certain aspects of the services provided by NWM Group require
local licences or individual equivalence decisions (temporary or otherwise) by
relevant regulators. In April 2024, the European Parliament approved the
Banking Package (CRR III/CRD VI). From 11 January 2027, non-EU firms providing
'banking services' will be required to apply for and obtain authorisation to
operate as third country branches in each relevant EU member state where they
provide these services, unless an exemption applies.

NatWest Group continues to evaluate its EU operating model, making adaptations
as necessary. For instance, in December 2024, NWM N.V., a subsidiary of NWM
Group, became the primary corporate and institutional customer-facing entity
of the NatWest Group in Europe.

Changes to, or uncertainty regarding NWM Group's EU operating model have been,
and may continue to be, costly and may: (i) adversely affect customers and
counterparties who are dependent on trading with the EU or personnel from the
EU; and/or (ii) result in regulatory sanction and/or further costs due to a
failure to receive the required regulatory permissions and/or further changes
to NWM Group's business operations, product offering, customer engagement, and
regulatory requirements (including as a result of CRD VI). These changes will
also impact NWM Plc's direct access to euro ECB liquidity facilities and euro
central bank reserves.

Furthermore, transferring business to an EEA based subsidiary, including in
connection with NatWest Group's EU corporate portfolio, is a complex exercise
and involves legal, regulatory and execution risks, and could result in a loss
of business and/or customers or higher than anticipated costs (refer to 'The
transfer of NatWest Group's EU corporate portfolio involves certain risks.').
Any of the above could, in turn, adversely affect NWM Group.

As a result of RBS Holdings N.V. and its subsidiary NWM N.V. (both
subsidiaries of NWM Group) being classified as a "significant supervised
group", ECB direct supervision of both subsidiaries began on 1 January 2024,
which could have an adverse effect on NWM Group's business strategy, operating
model and prudential requirements in the short and medium term.

Each of these risks, and others identified in this section entitled 'Principal
Risks and Uncertainties', could jeopardise the implementation and delivery of
NWM Group's strategy individually or collectively, and adversely affect NWM
Group's products and services offering or office locations, competitive
position, ability to meet targets and commitments, reputation with customers
or business model and may result in higher-than-expected costs. There is a
risk that the intended benefits of NatWest Group's and NWM Group's strategies
may not be realised in the timelines or in the manner contemplated, or at all.
Various aspects of NWM Group's strategy may not be successful, may not be
completed as planned, or at all, or could be phased or could progress in a
manner other than as expected. This could lead to additional management
actions by NatWest Group (or NWM Group), regulatory action or reduced
liquidity and/or funding opportunities.

Any of the above may lead to NWM Group not being viable, competitive, or
profitable, and may have a material adverse effect on NWM Group's future
results, financial condition, prospects, and/or reputation.

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

NatWest Group (including NWM Group) faces increasing competitive pressures and
technology disruption from incumbent traditional UK banks, challenger banks
and building societies (including those formed through mergers), fintech
companies (including companies offering buy-now-pay-later and payment
platforms), large technology conglomerates and new market entrants leveraging
technology and/or other advantages to compete for customer engagement.

"BigTech" companies pose a threat to incumbent banking providers because of
their customer innovation and global reach. In addition, digital-first banks
(often referred to as "neobanks") and fintechs are aiming to compete to serve
customers that increasingly use a constellation of providers to support their
complex and evolving needs (e.g., personal financial management, buy now and
pay later, and paying for goods and services in foreign currency).

Competition is expected to continue and intensify due to: evolving customer
behaviour, technological changes (including digital currencies, stablecoins
and the growth of digital banking), competitor behaviour, new market entrants,
competitive foreign exchange offerings, industry trends resulting in increased
disaggregation or unbundling of financial services or, conversely, the
re-intermediation of traditional banking services, and the impact of
regulatory actions, among others. In particular, NWM Group may be unable to
grow or retain market share due to new (or more competitive) banking, lending
and payment offerings by rapidly evolving incumbents and challengers
(including private credit, shadow banks, alternative or direct lenders and new
entrants). These competitive pressures may result in a shift in customer
behaviour and impact NWM 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 NWM 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. NWM Group's ability to develop or acquire
digital solutions and their integration into NWM Group's structures, systems
and controls has become increasingly important for retaining and growing NWM
Group's market share and customer-facing businesses.

NWM Group's innovation strategy (which includes investments in its IT
capability intended to improve its core infrastructure and customer interface
capabilities as well as investments and strategic partnerships with third
party technology providers) may not be successful or may not result in NWM
Group offering innovative products and services in the future. Furthermore,
competitors may outperform NWM Group in deploying technologies to deliver
products or services to customers, which may adversely affect NWM Group's
competitive position. In addition, continued industry consolidation and/or
technological developments could result in the emergence of new competitors or
strengthening NWM Group's current competitors, including in their ability to
offer a broader and more attractive or better value range of products and
services and geographic diversity. For example, new market entrants, including
non-traditional financial services providers, such as technology
conglomerates, may benefit from scale, technology and customer engagement
advantages and may be able to deliver financial services at a lower cost base.

Failure to offer competitive, attractive, innovative, and profitable products
that are also released in a timely manner, may result in lost market share,
losses on some or all of NWM Group's initiatives and missed growth
opportunities. For example, NWM 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 NWM Group to compete effectively or will deliver the
expected cost savings for NWM Group.

In addition, the implementation of NatWest Group's strategy, delivery on its
climate ambition and cost-controlling measures, may also have an adverse
effect on competitiveness and returns. Moreover, activist investor engagement
and increased intervention may challenge NatWest Group's (and NWM Group's)
strategic initiatives.

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

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

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

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

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

Financial resilience risk

NWM Group may not achieve its ambitions or targets, meet its guidance,
generate returns, or implement its strategy effectively.

NWM Group has set a number of financial, capital and operational targets and
provided guidance including in respect of: CET1, MREL and leverage ratio
targets, targets in relation to local regulation, funding plans and
requirements, employee engagement, diversity and inclusion as well as it
contributes to NatWest Group's climate and sustainability-related ambitions,
targets and commitment and the implementation of NatWest Group's climate
transition plan.

NWM Group's ability to meet its ambitions, targets, guidance, and make
discretionary capital distributions is subject to various internal and
external factors, risks and uncertainties. These include but are not limited
to: UK and global macroeconomic, political, market and regulatory
uncertainties, customer behaviour, operational risks and risks relating to NWM
Group's business model and strategy (including risks associated with climate
and other sustainability-related issues). Refer to 'NWM Group, its customers
and its counterparties face continued economic and political risks and
uncertainties in the UK and global markets, including as a result of inflation
and interest rates, supply chain disruption, protectionist policies, and
geopolitical developments.'

A number of factors may impact NWM Plc and NWM N.V.'s abilities to meet and
maintain their respective CET1 ratio targets, including the macroeconomic
environment, impairments, the extent of organic capital generation and the
receipt and payment of dividends. Refer to 'NWM Plc and/or its regulated
subsidiaries may not meet the prudential regulatory requirements for
regulatory capital.' Furthermore, the focus on maintaining a disciplined cost
base may result in limited investment in other areas which could affect NWM
Group's long-term product offering or competitive position and its ability to
meet its other targets, including those related to customer satisfaction. In
addition, challenging trading conditions may adversely affect NWM Group's
business and its ability to achieve its targets, meet its guidance, and
execute its strategy. Furthermore, NWM Group's strategy may not be
successfully executed or it may not meet its ambitions, targets, guidance and
expectations.

Any of the above may lead to NWM Group not being a viable, competitive or
profitable banking business and may have a material adverse effect on NWM
Group's future results, financial condition, prospects, and/or reputation.

NWM Plc and/or its regulated subsidiaries may not meet the prudential
regulatory requirements for regulatory capital.

NWM Group is required by regulators in the UK, the EU and other jurisdictions
in which it undertakes regulated activities to maintain adequate financial
resources. Adequate capital provides NWM Group with financial flexibility in
the face of turbulence and uncertainty in the global economy and specifically
in its core UK operations.

NWM Plc's and NWM N.V.'s target CET1 ratios are based on regulatory
requirements and management actions (see the targets set forth in each
respective entity's Outlook section) that rely on internal modelling and risk
appetite (including under stress). As at 31 December 2025, NWM Plc's solo CET1
ratio was 18.4 % and its CET1 target ratio for the medium term is around 14%.
NWM Plc's current capital strategy is based on the management of RWAs and
other capital management initiatives (including the optimisation of RWAs and
the periodic payment of dividends to NatWest Group plc, NWM Plc's parent
company).

A number of factors may impact NWM Plc and NWM N.V.'s ability to maintain
their CET1 ratio target and achieve their capital strategy. These include:

·     a depletion of NWM Plc or NWM N.V.'s capital resources through
reduced profits (which would in turn impact retained earnings) and may result
from revenue attrition or increased liabilities, sustained periods of low
interest rates, reduced asset values resulting in write-downs or reserve
adjustments, impairments, changes in accounting policy, accounting charges or
foreign exchange movements;

·     an increase in the quantum of NWM Plc's or NWM N.V.'s RWAs,
stemming from exceeding target RWA levels, regulatory changes (including their
interpretation or application), foreign exchange movements or a failure in
internal controls or procedures to accurately measure and report RWAs/leverage
exposure.;

·     changes in prudential regulatory requirements including the Total
Capital Requirement for NWM Plc (as regulated by the PRA) or NWM N.V. (as
regulated by the ECB), including Pillar 2 requirements and regulatory buffers
as well as any applicable scalars;

·     further losses (including as a result of extreme one-off incidents
such as cyberattack, fraud or conduct issues) would deplete capital resources
and place downward pressure on the CET1 ratio; or

·     the timing of planned liquidation, disposal and/or capital releases
of capital including on activity or legacy entities owned by NWM Plc and NWM
N.V. Refer to 'NWM Group has been in a period of, and may continue to be
subject to, significant structural and other change.'

Management actions taken under a stress scenario may affect, among other
things, NWM Group's product offering, its credit ratings, its ability to
operate its businesses and pursue its strategy, any of which may negatively
impact investor confidence, and the value of NWM Group's securities. Refer to
'NWM Plc and/or its regulated subsidiaries may not manage their capital,
liquidity or funding effectively which could trigger the execution of certain
management actions or recovery options,' 'NatWest Group (including NWM 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 NWM Group entities' Eligible Liabilities', and 'NWM Group could
be adversely affected if NatWest Group fails to meet the requirements of
regulatory stress tests, or if NatWest Group's resolution preparations are
deemed inadequate.'

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

NWM Group is reliant on access to the capital markets to meet its funding
requirements, both directly through wholesale markets, and indirectly through
its parent (NatWest Group plc) for the subscription to its internal capital
and MREL. The inability to do so may adversely affect NWM Group.

NWM Plc's funding plan are based on its current and anticipated business
activities. NWM Group (which includes NWM N.V.) therefore has significant
anticipated funding requirements, which may increase in the future (including
as a result of changes to NatWest Group's and NWM Group's EU operating model),
and is reliant on frequent access to the capital markets for funding, at a
cost that can be passed through to its customers. This access entails
execution risk, regulatory risk, risk of reduced commercial activity, risk of
loss of market confidence in NWM Group if it cannot finance its activities and
risk of a ratings downgrade, which could be influenced by a number of internal
or external factors, including, those summarised in these risk factors.

In addition, NWM Plc receives capital and funding from NatWest Group plc. NWM
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 NWM Plc to meet its internal targets is therefore a function of the level
of RWAs and its leverage exposure in NWM Plc and this may vary over time. NWM
Plc's internal MREL comprises the regulatory value of capital instruments and
loss-absorbing senior funding issued by NWM Plc to its parent, NatWest Group
plc, in all cases with a residual maturity of at least one year.

The BoE has identified that the preferred resolution strategy for NatWest
Group is as a single point-of-entry. As a result, NatWest Group plc is the
only entity able to issue Group MREL eligible liabilities to third-party
investors, using the proceeds to fund the internal capital and MREL targets
and/or requirements of its operating entities, including NWM Plc.

NWM Plc is therefore dependent not only on NatWest Group plc to fund its
internal capital targets, but also on NatWest Group plc's ability to source
appropriate funding. NWM Plc is also dependent on NatWest Group plc to
continue to fund NWM Plc's internal MREL targets over time and its ability to
issue and maintain sufficient amounts of external MREL liabilities to support
this. In turn, NWM Plc is required to fund the internal capital requirements
and MREL of its subsidiaries. If NatWest Group plc is unable to issue
securities externally as planned, this may have a negative impact on NWM Plc's
current and forecasted MREL position, particularly if NatWest Group plc is
unable to downstream capital and/or funding to NWM Plc. This could exacerbate
funding and liquidity risk, which may adversely affect NWM Group.

Any inability of NWM Group to adequately access the capital markets, to manage
its balance sheet in line with assumptions in its funding plans, or to issue
internal capital and MREL may adversely affect NWM Group, such that NWM Group
may not constitute a viable banking business and/or NWM Plc or NWM N.V. may
fail to meet their respective regulatory capital and/or MREL targets, as
applicable.

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

NWM 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 NWM Group and the industry as a whole. NatWest Group and NWM Plc (on a
standalone basis) 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, NWM Group may therefore access sources of liquidity and funding
through deposits and wholesale funding, including debt capital markets and
trading liabilities such as repurchase agreements. As at 31 December 2025, NWM
Group held £15.7 billion in deposits from banks and customers.

The level of deposits and wholesale funding may fluctuate due to factors
outside NWM Group's control. These factors include: loss of customers, changes
in customer behaviour, loss of customer and/or investor confidence (including
in individual NWM Group entities or the UK banking sector or the banking
sector as a whole), macroeconomic developments, political uncertainty, changes
in interest rates, market volatility, increasing competitive pressures for
bank funding (including from new entrants, fintech companies, or new deposit
offerings (such as digital assets), or the reduction or cessation of deposits
and other funding by counterparties, any of which could lead to result in a
significant outflow of deposits or reduction in wholesale funding in sterling
or in foreign currencies within a short period of time, higher funding costs
and failure to comply with regulatory capital, funding and leverage
requirements. As a result, NWM Plc and its subsidiaries could be required to
change their funding plans and/or their funding operations. For example,
impairments or other losses as well as increases to capital deductions may
result in a decrease to NWM Plc's capital base, and/or that of its
subsidiaries.

Refer to 'NWM Group has significant exposure to counterparty and borrower risk
including credit losses, which may have an adverse effect on NWM Group'. An
inability to grow, roll-over, or any material decrease in, NWM Group's
deposits, short-term wholesale funding and short-term liability financing
could, particularly if accompanied by one of the other factors described
above, adversely affect NWM Group.

NWM Group engages from time to time in 'fee based borrow' transactions whereby
collateral (such as government bonds) is borrowed from counterparties on an
unsecured basis in return for a fee. This borrowed collateral may be used by
NWM Group to finance parts of its balance sheet, either in its repo financing
business, derivatives portfolio or more generally across its balance sheet. If
such 'fee based borrow' transactions are unwound whilst used to support the
financing of parts of NWM Group's balance sheet, then unsecured funding from
other sources would be required to replace such financing. There is a risk
that NWM Group would be unable to replace such financing on acceptable terms
or at all, which could adversely affect its liquidity position and have an
adverse effect on NWM Group. In addition, because 'fee based borrow'
transactions are conducted off-balance sheet (due to the collateral being
borrowed) investors may find it more difficult to gauge NWM Group's
creditworthiness, which may be affected if these transactions were to be
unwound in a stress scenario. Any lack of or perceived lack of
creditworthiness may adversely affect NWM Group.

As at 31 December 2025, NWM Plc reported an average liquidity coverage ratio
of 198% for the preceding 12 months. If its liquidity position and/or funding
were to come under stress and if NWM Group is unable to raise funds through
deposits, wholesale funding sources or other reliable funding sources, on
acceptable terms, or at all, its liquidity position would likely be adversely
affected. This would mean that NWM Group might be unable to: meet deposit
withdrawals on demand or at their contractual maturity, repay borrowings as
they mature, meet its obligations under committed financing facilities, comply
with regulatory funding requirements, undertake certain capital and/or debt
management activities, or fund new loans, investments and businesses.

If, under a stress scenario, the level of liquidity falls outside of NWM
Group's risk appetite, there are a range of recovery management actions that
NWM 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 NWM Group. Under the PRA
Rulebook, NatWest Group must maintain a recovery plan acceptable to its
regulator, such that a breach of NWM Group's applicable liquidity requirements
would trigger consideration of NWM Plc's recovery actions, and in turn may
prompt consideration and execution of NatWest Group's recovery plan, to
attempt to remediate a deficient liquidity position.

NWM Group may need to liquidate assets to meet its liabilities, including
disposals of assets not previously identified for disposal to reduce its
funding or payment commitments or trigger the execution of certain management
actions or recovery options. This could also lead to higher funding costs
and/or changes to NWM Group's funding plans or its operations. In a time of
reduced market liquidity or market stress, NWM Group may be unable to sell
some of its assets or may need to sell assets at depressed prices, which in
either case may adversely affect NWM Group.

NWM Group entities independently manage liquidity risk on a stand-alone basis,
including through holding their own liquidity portfolios. They have restricted
access to liquidity or funding from other NatWest Group entities.

NWM Group entities' management of their own liquidity portfolios and the
structure of capital support are subject to operational and execution risk.
Continuing market volatility may impact capital and RWAs and NWM Group and its
subsidiaries may be required to adapt their funding plans or change their
operations in order to satisfy their respective capital and funding
requirements, which may have a negative impact on NWM Group. Market volatility
may also result in increases to leverage exposure.

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

NWM Plc and/or its regulated subsidiaries may not manage their capital,
liquidity or funding effectively which could trigger the execution of certain
management actions or recovery options.

Under the PRA Rulebook, NatWest Group must maintain a recovery plan acceptable
to its regulator, such that a breach of NWM Plc's applicable capital or
leverage, liquidity or funding requirements would trigger consideration of NWM
Plc's recovery actions, and in turn may prompt consideration and execution of
NatWest Group's recovery actions. If, under stressed conditions, the
liquidity, capital or leverage ratio were to decline, there are a range of
recovery management actions (focused on risk reduction and mitigation) that
NWM Plc could undertake that may or may not be sufficient to restore adequate
liquidity, capital and leverage ratios. Additional management options relating
to existing capital issuances, asset or business disposals, capital payments
and dividends from NWM Plc to its parent, could also be undertaken to support
NWM Plc's capital and leverage requirements. NatWest Group may also address a
shortage of capital in NWM Plc by providing parental support to NWM Plc.
NatWest Group's (and NWM Plc's) regulator may also request that NWM Group
carry out additional capital management actions. The BoE has identified single
point-of-entry at NatWest Group plc, as the preferred resolution strategy for
NatWest Group. However, under certain conditions set forth in the BRRD, as
implemented in the UK through the Banking Act 2009, the BoE in its capacity as
the UK resolution authority also has the power to execute the 'bail-in' of
certain securities of NWM Group without further action at NatWest Group level.

Any capital management actions taken under a stress scenario may, in turn,
affect: NWM Group's product offering, credit ratings, ability to operate its
businesses and pursue its strategy as well as negatively impacting investor
confidence and the value of NWM Group's securities. Refer to 'NatWest Group
(including NWM 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 NWM Group entities' Eligible Liabilities.' In
addition, if NWM Plc or NWM N.V.'s liquidity position were to be adversely
affected, this may require assets to be liquidated or may result in higher
funding costs, which may adversely affect NWM Group's operating performance.

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

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

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

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

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

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

Credit risk may arise from a variety of business activities, including, but
not limited to: extending credit to customers through various lending
commitments; entering into swap or other derivative contracts under which
counterparties have obligations to make payments to NWM Group (including
uncollateralised derivatives); providing short or long-term funding that is
secured by physical or financial collateral whose value may at times be
insufficient to fully cover the loan repayment amount; posting margin and/or
collateral and other commitments to clearing houses, clearing agencies,
exchanges, banks, securities firms and other financial counterparties; and
investing and trading in securities and loan pools, whereby the value of these
assets may fluctuate based on realised or expected defaults on the underlying
obligations or loans. Any negative developments in the activities listed above
may negatively impact NWM Group's customers and credit exposures, which may,
in turn, adversely affect NWM Group's profitability. Refer to 'Risk and
capital management - Credit Risk'.

NWM N.V., a subsidiary of NWM Plc, has a portfolio of loans and loan
commitments to EU corporate customers. As a result, through the NWM N.V.
business and NWM Group's other activities, NWM 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 NWM
Group's businesses. These risks may be concentrated for those businesses for
which customer income is heavily weighted towards a specific geographic
region, industry or customer base. Furthermore, these risks are likely to
increase due to a potential transfer of NatWest Group's Transfer Business (see
'The transfer of NatWest Group's EU corporate portfolio involves certain
risks').

The credit quality of NWM 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 'NWM Group, its
customers and its counterparties face continued economic and political risks
and uncertainties in the UK and global markets, including as a result of
inflation and interest rates, supply chain disruption, protectionist policies,
and geopolitical developments'. Any further deterioration in these conditions
or changes to legal or regulatory landscapes could worsen borrower and
counterparty credit quality or impact the enforcement of contractual rights,
increasing credit risk.

NWM Group is exposed to the financial sector, including sovereign debt
securities, financial institutions, financial intermediation providers
(including providing facilities to financial sponsors and funds, backed by
assets or investor commitments) and securitised products (typically senior
lending to special purpose vehicles backed by pools of segregated financial
assets). Concerns about, or a default by, a financial institution or
intermediary could lead to significant liquidity problems and losses or
defaults by other financial institutions or intermediaries, since the
commercial and financial soundness of many financial institutions and
intermediaries is closely related and interdependent as a result of credit,
trading, clearing and other relationships. These risks may increase where a
significant proportion of NWM Group's business activities relate to a single
counterparty, a related and/or connected group of counterparties or a similar
type of customer, product, sector or geography. Any perceived lack of
creditworthiness of a counterparty or borrower may lead to market-wide
liquidity problems and losses for NWM 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 NWM 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 NWM Group interacts on a regular basis. Refer
to 'NWM Group is reliant on access to the capital markets to meet its funding
requirements, both directly through wholesale markets, and indirectly through
its parent (NatWest Group plc) for the subscription to its internal capital
and MREL. The inability to do so may adversely affect NWM Group.' and 'NWM
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 NWM
Group and an inability to engage in routine funding transactions.

The value or effectiveness of any credit protection that NWM Group has
acquired through significant risk transfer (SRT) transactions depends on the
value of the underlying assets and the financial condition of the
counterparties and protection providers, and prevailing market spreads.
Although extensive assessments are undertaken prior to execution, there can be
no assurance that such protection will remain effective or enforceable. SRT
transactions anticipated capital relief is subject to ongoing regulatory
recognition and the performance of the securitised portfolio. Any
deterioration in asset quality, structural breaches, operational errors or
changes in regulatory interpretation could reduce or eliminate the expected
benefit. These transactions also introduce counterparty and model risk. As
with other forms of credit protection, fluctuations in fair value or
deterioration in the financial condition or perceived creditworthiness of
counterparties may lead to additional valuation adjustments or impairments.
Any such developments or fair value changes may have an adverse effect on NWM
Group.

NWM Group has applied an internal analysis of multiple economic scenarios
(MES) together with the determination of specific overlay adjustments to
inform its IFRS 9 ECL (Expected Credit Loss). The recognition and measurement
of ECL is complex and involves the use of significant judgement and
estimation. This includes the formulation and incorporation of multiple
forward-looking economic scenarios into ECL to meet the measurement objective
of IFRS 9. The ECL provision is sensitive to the model inputs and economic
assumptions underlying the estimate. Refer to 'Risk and capital management -
Credit risk'. A credit deterioration would also lead to RWA increases.
Furthermore, the assumptions and judgements used in the MES and ECL assessment
at 31 December 2025 may not prove to be adequate, resulting in incremental ECL
provisions for NWM Group.

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

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

NWM 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 NWM Group's business, strategy and capital
requirements, NWM 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, NWM Group
utilises models for valuations, credit approvals, calculation of loan
impairment charges on an IFRS 9 basis, financial reporting and to help address
criminal activities in the form of money laundering, terrorist financing,
bribery and corruption, tax evasion and sanctions as well as external or
internal fraud (collectively, 'financial crime'). NWM Group's models, and the
parameters and assumptions on which they are based, are periodically reviewed.

Model outputs are inherently uncertain, because they are imperfect
representations of real-world phenomena, are simplifications of complex
real-world systems and processes, and are based on a limited set of
observations. NatWest Group (which includes NWM Group) also continues to
invest in building new capabilities that employ new artificial intelligence
technologies, such as generative artificial intelligence, and it expects its
use of these technologies to increase over time. However, there are
significant risks involved in utilising more sophisticated modelling
approaches, including artificial intelligence, and no assurance can be
provided that NWM Group's use of artificial intelligence in its models will
enhance its business or produce only intended or beneficial results. NWM Group
may face adverse consequences as a result of actions or decisions based on
models that are poorly developed, incorrectly implemented, outdated,
non-compliant, 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 NWM 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, NWM Group's) regulators
(including as part of NatWest Group's mandated stress testing), increased
capital requirements, rendering some business lines uneconomical, requiring
management action or subjecting NWM Group to regulatory sanction, any of which
in turn may also have an adverse effect on NWM Group and its customers.

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

NWM 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 NWM Group's future financial
results with its historical results. Actual results may differ due to the
inherent uncertainty in making climate-related and sustainability estimates,
judgements and assumptions. Refer to 'There are significant limitations
related to accessing accurate, reliable, verifiable, auditable, consistent and
comparable climate and sustainability-related data that contributes to
substantial uncertainties in accurately assessing, managing and reporting on
climate and sustainability-related information and risks, as well as making
informed decisions.'

Accounting policies deemed critical to NWM Group's results and financial
position, based upon materiality and significant judgements and estimates,
involve a high degree of uncertainty and may have a material impact on its
results. For 2025, these include fair value, deferred tax and provisions for
liabilities and charges. These are set out in the section 'Critical accounting
policies'.

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

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

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

NWM Group's trading assets amounted to £46.2 billion as at 31 December 2025.
The valuation of financial instruments, including derivatives, measured at
fair value can be subjective, in particular where models are used which
include unobservable inputs. Generally, to establish the fair value of these
instruments, NWM Group relies on quoted market prices or, where the market for
a financial instrument is not sufficiently credible, internal valuation models
that utilise observable market data. In certain circumstances, the data for
individual financial instruments or classes of financial instruments utilised
by such valuation models may not be available or may become unavailable due to
prevailing market conditions. In these circumstances, NWM Group's internal
valuation models require NWM Group to make assumptions, judgements and
estimates to establish fair value, which are complex and often relate to
matters that are inherently uncertain. Any of these factors could require NWM
Group to recognise fair value losses which may have an adverse effect on NWM
Group's income generation and financial position.

From time to time, the International Accounting Standards Board may also issue
new accounting standards or interpretations that could materially impact how
NWM Group calculates, reports and discloses its financial results and
financial condition, and which may affect NWM Group's capital ratios,
including the CET1 ratio and the required levels of regulatory capital. New
accounting standards and interpretations that have been issued by the
International Accounting Standards Board but which have not yet been adopted
by NWM Group are discussed in 'Future accounting developments'.

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

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

NatWest Group (which includes NWM 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 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 NWM
Group may need to take action to strengthen its capital position.

Failure by NatWest Group to meet its quantitative and qualitative requirements
of the stress tests 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 and/or
loss of investor confidence, which may adversely affect NWM Group.

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. In August 2024, the BoE communicated its assessment of
NatWest Group's preparations for a potential resolution scenario and did not
identify any areas for further enhancement, shortcomings, deficiencies or
substantive impediments.

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

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

NatWest Group (including NWM 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 NWM Group entities' 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
NWM 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. Similar powers may also be
exercised with respect to NWM N.V., in the Netherlands by the relevant Dutch
and European regulatory authorities.

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 NWM
Group), which may depend on factors outside of NWM 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 correspondingly be a material adverse
effect on NWM Group's future results, financial condition, prospects, and/or
reputation.

Operational and IT resilience risk

Operational risks (including reliance on third party suppliers and outsourcing
of certain activities) are inherent in NWM 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. NWM Group operates in several countries, offering a diverse range of
products and services supported directly or indirectly by third party
suppliers. As a result, operational risks or losses can arise from a number of
internal or external factors (including for example, payment errors or
financial crime and fraud), for which there is continued scrutiny by third
parties on NWM Group's compliance with financial crime requirements; see 'NWM
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 NWM Group.' These risks are also present when NWM Group
relies on critical service providers (suppliers) or vendors to provide
services to it or its customers, as is increasingly the case as NWM Group
outsources certain activities, including with respect to the implementation of
technologies, innovation (such as cloud services and artificial intelligence)
and responding to regulatory and market changes.

Operational risks also exist due to the implementation of NatWest Group's
strategy, and the organisational and operational changes involved, including:
NatWest Group's cost-controlling and simplification measures; continued
digitalisation and the integration of artificial intelligence in the business;
acquisition, divestments and other transactions; the implementation of
recommendations from internal and external reviews with respect to certain
governance processes, policies, systems and controls of NatWest Group
entities; 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 NWM Group's ability to maintain
effective internal controls and governance frameworks. In recent years, NWM
Group has materially increased its dependence on NatWest Bank Plc and other
NatWest Group entities for numerous 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. A
failure by NatWest Bank Plc or other NatWest Group entities to adequately
supply these services may expose NWM Group to critical business failure risk,
increased costs, regulatory sanctions, and other liabilities. These and any
increases in the cost of these services may adversely affect NWM Group.

Financial crime continues to evolve, whether through fraud, scams,
cyberattacks or other criminal activity. These risks are exacerbated as NWM
Group continues to innovate its product offering and increasingly offers
digital solutions to its customers. NatWest Group (including NWM 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. A number of NWM
Group's financial crime controls are operated by NatWest Group on behalf of
NWM Group. Financial crime assessment, systems and controls, internal stress
tests and models are critical to financial crime risk management. Ineffective
risk management may arise from a wide variety of factors, including lack of
transparency or incomplete risk reporting, manual processes and controls,
inaccurate data, inadequate IT systems, unidentified conflicts or misaligned
incentives, lack of accountability control and governance, incomplete risk
monitoring (including trade surveillance) and failures of systems to properly
process all relevant data, risks related to unanticipated behaviour or
performance and management, insufficient challenges or assurance processes, or
a failure to commence or timely complete risk remediation projects. Weak or
ineffective financial crime processes and controls may risk NWM Group
inadvertently facilitating financial crime which may result in regulatory
investigation, sanction, litigation, fines and/or reputational damage.
Further, failure to manage these risks effectively, or within regulatory
expectations, could adversely affect NWM Group's reputation or its
relationship with its regulators, customers, shareholders or other
stakeholders.

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

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

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

NWM Group experiences a constant threat from cyberattacks across the entire
NatWest Group (including NWM Group) and against NatWest Group and NWM Group's
supply chain networks, reinforcing the importance of due diligence of, ongoing
risk management of, and a close working relationship with, the third parties
on which NWM Group relies. NWM Group is reliant on technology, against which
there is a constantly evolving series of attacks, that are increasing in terms
of frequency, sophistication, impact and severity. The increased availability
of malicious tools and the rapid advancement of artificial intelligence
capabilities reduce entry barriers for malicious actors and accelerate the
exploitation of vulnerabilities leading to cyberattacks evolving and becoming
more sophisticated. As a result, NWM Group is required to continue to invest
significant resources in additional capability designed to defend against a
variety of existing and emerging threats.

Third parties continue to make hostile attempts to gain access to, introduce
malware (including ransomware) into, and exploit potential vulnerabilities of,
financial services institutions' IT systems, including those of NWM Group. For
example, in 2025, NatWest Group and its supply chain were subjected to a small
number of attempted Distributed Denial of Service and ransomware attacks.
These hostile attempts were addressed without material impact on NWM 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 NWM Group's customers. Consequently, NWM Group continues to invest
significant resources in developing and evolving cybersecurity capabilities
and controls that are designed to mitigate the potential effect of such
attacks. However, given the nature of the threat, there can be no assurance
that these capabilities and controls will prevent the potential adverse effect
of an attack from occurring. Refer to 'NWM Group's operations are highly
dependent on its complex IT systems and any IT failure could adversely affect
NWM Group.'

Any failure in NWM Group's information and cybersecurity policies, procedures
or controls, may result in significant financial losses, major business
disruption, inability to deliver customer services, or loss of, or ability to
access, data or systems or other sensitive information (including as a result
of an outage) and may cause associated reputational damage. Any of these
factors could increase costs (including, but not limited to costs, relating to
notification of, or compensation for customers and credit monitoring), result
in regulatory investigations or sanctions being imposed or may affect NWM
Group's ability to retain and attract customers. Regulators in the UK, US,
Europe and Asia 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 EU Digital Operational Resilience Act
('DORA')). Furthermore, cyberattacks on NWM Group's counterparties and
suppliers may also have an adverse effect on NWM Group's operations.
Additionally, malicious third parties may induce employees, customers, third
party providers or other users with access to NWM Group's systems to
wrongfully disclose sensitive information to gain access to NWM Group's data
or systems or that of NWM Group's customers or employees. Cybersecurity and
information security events can derive from factors such as: internal or
external threat actors, human error, fraud or malice on the part of NWM
Group's employees, customers or third parties, including third-party
providers, or may result from technological failure (including defective,
inadequate or inappropriately used artificial intelligence based solutions).

NWM 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 an adverse effect on NWM Group. Due to NWM 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 NWM Group.

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

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

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

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

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

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

The inability to compensate employees competitively and/or any reduction of
compensation, the perception that NWM Group may not be a competitive business,
heightened regulatory oversight of banks compared to firms outside of banking
and ongoing restrictions placed on employee compensation arrangements,
particularly in the EU, or other factors, may have an adverse effect on NWM
Group's ability to hire, retain and engage well qualified employees,
especially at a senior level, which could adversely affect NWM Group.

In addition, certain economic, market and regulatory conditions may reduce the
pool of candidates for key management and non-executive roles, including
non-executive directors with the right skills, knowledge and experience, or
may increase the number of departures of existing employees. Moreover, a
failure to foster a diverse workforce and an inclusive work environment may
adversely affect NWM Group's employee engagement and the execution of its
strategy, and could also have an adverse effect on its reputation with
customers, investors and regulators.

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

Some of NWM Group's employees are represented by employee representative
bodies, including trade unions and works councils. Engagement with its
employees and such bodies is important to NWM Group in maintaining good
employee relations. Any breakdown of these relationships may adversely affect
NWM Group.

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

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

NWM 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 NWM 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), is critical to NWM Group's operations. NWM
Group's reliance on a limited number of cloud services providers increases its
exposure to disruption events affecting these cloud services providers.

Individually or collectively, whether operated by NWM Group or by a third
party supplier, any system failure (including defective or inadequate
automated processes or artificial intelligence based solutions), loss of
service availability, or breach of data security could potentially cause
significant damage to: (i) important business services across NWM Group; and
(ii) NWM 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 NWM Group's regulatory
approvals, competitive position, business and brands, which could undermine
its ability to attract and retain customers and talent.

NWM Group outsources certain functions as it innovates and offers new digital
solutions to its customers. Outsourcing, alongside hybrid working, heighten
the above risks. NWM Group uses IT systems that enable remote working
interface with third-party systems, and NWM Group could experience service
denials or disruptions if such systems exceed capacity or if NWM Group or a
third-party system fails or experiences any interruptions, all of which could
result in business and customer interruption and related reputational damage,
significant compensation costs, regulatory sanctions and/or a breach of
applicable regulations. Hybrid working arrangements for NWM Group employees
place heavy reliance on the IT systems that enable remote working and may
place additional pressure on NWM Group's ability to maintain effective
internal controls and governance frameworks and increase operational risk.

In 2025, NWM Group continued to make considerable investments to further
simplify, upgrade and improve its IT and technology capabilities (including
migration of certain services to cloud platforms and risk-based removal of
technology obsolescence). NWM Group continues to develop and enhance digital
services for its customers and seeks to improve its competitive position
through integrating automated processes and artificial intelligence-based
solutions in its business and by enhancing controls and procedures and
strengthening the resilience of services including cybersecurity. Any failure
of these investment and rationalisation initiatives to achieve the expected
results, due to poor design or implementation, defects, or otherwise, may
adversely affect NWM Group's operations, its reputation and ability to retain
or grow its customer business or adversely affect its competitive position.
Refer to 'NWM Group has been in a period of, and may continue to be subject
to, significant structural and other change'.

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

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

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

NWM Group promotes a risk-aware culture and invests in policies and resources
to manage risks. However, these measures may not entirely prevent a failure in
NWM Group's risk management framework. For example, instances of misconduct
may arise from: business decisions, actions or reward mechanisms that fail to
comply with NWM Group's regulatory obligations, do not adequately address
customers' needs, or are misaligned with NWM Group's strategic objectives;
ineffective product management; unethical or inappropriate use of data,
information asymmetry, implementation and utilisation of new technologies,
outsourcing of customer service and product delivery; inappropriate behaviour
towards customers, customer outcomes, the possibility of mis-selling of
financial products; and mishandling of customer complaints. Furthermore, any
failure in the EWRMF may also result in the inability for NWM Group to achieve
its strategic objectives for its customers, employees and wider stakeholders.

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

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

Reputational risk relates to stakeholder and public perceptions of NWM 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, NWM Group's strategy, or due to any events, behaviour, action
or inaction by NWM Group, its employees or those with whom NWM Group is
associated. Refer to 'NWM Group's businesses are subject to substantial
regulation and oversight, which are constantly evolving and may adversely
affect NWM Group.' This includes harm to its brand, which may be detrimental
to NWM 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 NWM Group's ability to attract and retain customers.

In particular, NWM Group's ability to attract and retain customers, 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 NWM Group or any other member of NatWest Group conducts or
modifies its business activities and operations, media coverage (whether
accurate or otherwise), employee misconduct, NWM Group's financial
performance, IT systems failures or cyberattacks, data breaches, financial
crime and fraud, 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 NWM 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 NWM Group's future results, financial condition, prospects, and/or
reputation.

Legal and regulatory risk

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

NWM Group is subject to extensive laws, regulations, guidelines, corporate
governance practice and disclosure requirements, administrative actions and
policies in each jurisdiction in which it operates, which presents ongoing
compliance and conduct risks. Many of these are constantly evolving and are
subject to further material changes, which may increase compliance and conduct
risks, particularly as the laws of different jurisdictions (including those of
the EU/EEA and UK) diverge. NWM 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, the EU and the US,
financial industry reforms (such as the FSMA 2023), corporate governance
requirements, rules relating to the compensation of senior management and
other employees, enhanced data protection and IT resilience requirements,
financial market infrastructure reforms, enhanced regulations in respect of
the provision of 'investment services and activities'.

There is also continued regulatory focus in certain areas, including conduct,
model risk governance, consumer protection in retail or other financial
markets, competition and disputes regimes, anti-money laundering,
anti-corruption, anti-bribery, anti-tax evasion, payment systems and digital
assets, sanctions and anti-terrorism laws and regulations.

In addition, there is significant oversight by competition authorities. The
competitive landscape for banks and other financial institutions in the UK,
EU/EEA, Asia and the US is rapidly changing. Recent regulatory and legal
changes have resulted and may continue to result in new market participants
and changed competitive dynamics in certain key areas.

Regulatory and competition authorities, including the CMA, are also reviewing
and focusing more on how they can support competition and innovation in
digital and other markets. 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 that 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 NWM 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 NWM Group include, but
are not limited to, the following:

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

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

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

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

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

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

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

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

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

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

-    reform to the Consumer Credit Act 1974;

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

Material consequences could arise should NWM 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 NWM Group's ability to comply with the
applicable body of rules and regulations in the manner and within the
timeframes required.

Changes in laws, rules or regulations, or in their interpretation or
enforcement, or the implementation of new laws, rules or regulations,
including contradictory or conflicting laws, rules or regulations by key
regulators or policymakers in different jurisdictions (such as divergence of
regulations of digital assets and cryptocurrency), or failure by NWM Group to
comply with such laws, rules and regulations, may adversely affect NWM 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 NWM 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 NWM Group's future
results, financial condition, prospects, and/or reputation.

NWM 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 NWM Group.

NWM 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. NWM Group has resolved a
number of legal and regulatory actions over the past several years but
continues to be, and may in the future be, involved in such actions in the US,
the UK, Asia, Europe and other jurisdictions.

NWM Group is, has been or will likely be involved in a number of significant
legal and regulatory actions, including investigations, proceedings and
ongoing reviews (both formal and informal) by governmental law enforcement and
other agencies and litigation proceedings, including in relation to the
offering of securities, conduct in the foreign exchange market, the setting of
benchmark rates such as LIBOR and related derivatives trading, the issuance,
underwriting, and sales and trading of fixed-income securities (including
government securities), product mis-selling, customer mistreatment, anti-money
laundering, antitrust, VAT recovery, record keeping, reporting, and various
other issues.

There is also an increasing risk of new class action claims being brought
against NWM 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. NWM Group's expectation for resolution may change and
substantial additional provisions and costs may be recognised in respect of
any matter.

The resolution of significant investigations includes NWM Plc's December 2021
spoofing-related guilty plea in the United States that was agreed with the US
Department of Justice ('DOJ'), and involves a multi-year period of probation
and ongoing commitments to improve the compliance programme and reporting
obligations. In the event that NWM Plc does not meet its obligations to the
DOJ, this may lead to adverse consequences such as findings that NWM Plc
violated its probation term and possible re-sentencing, and/or increased
costs, amongst other consequences. For additional information relating to this
and other legal and regulatory proceedings and matters to which NWM Group is
currently exposed, see 'Litigation and regulatory matters' at Note 25 to the
consolidated accounts.

Recently resolved matters or adverse outcomes or resolution of current or
future legal or regulatory matters, 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 NWM Group's business and result in restrictions or
limitations on NWM 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 NWM Group, particularly but not solely in the US, which
may take a significant period of time and the results and implications of
which are uncertain. Disqualification from carrying on any activities, whether
automatically as a result of the resolution of a particular matter or as a
result of the failure to obtain such licences or waivers could adversely
affect NWM Group's business, in particular in the US. This in turn and/or any
fines, settlement payments or penalties may have an adverse effect on NWM
Group. Similar consequences could result from legal or regulatory actions
relating to other parts of NatWest Group.

Failure to comply with undertakings made by NWM Group to its regulators, or
the conditions of probation resulting from the spoofing-related guilty plea,
may result in additional measures or penalties being taken against NWM 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 NWM Group's operations, additional supervision by NWM Group's regulators,
and loss of investor confidence.

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

In accordance with the accounting policies set out in the section 'Critical
accounting policies', NWM 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 £132 million as at
31 December 2025. Changes to the treatment of certain deferred tax assets may
impact NWM Group's capital position. In addition, NWM 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 NWM Group's future
results, financial condition, prospects, and/or reputation.

Climate and sustainability-related risks

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

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

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

Climate-related physical risks are associated with increasing frequency and
intensity of extreme weather events, including floods, wildfires and changes
in climate conditions. Such events can impact employee health and safety,
negatively impact local communities where NWM Group operates, damage assets,
property and infrastructure, and disrupt operations and supply chains,
resulting in changes in asset value, deterioration of the value of collateral
or insurance shortfalls and increased costs and credit defaults. This can
negatively impact the creditworthiness of customers and their ability and/or
willingness to pay fees, afford new products or repay their debts, leading to
increased default rates, delinquencies, write-offs and impairment charges in
NWM Group's portfolios while simultaneously increasing NWM Group's own
operational costs and exposing it to potential business continuity challenges.
In addition, NWM Group's premises and operations, or those of its critical
outsourced functions may experience damage or disruption leading to increased
costs for NWM Group.

Climate-related transition risks arise from the UK's and global economies'
shift to net zero. The pace and nature of transition, whether orderly or
disorderly, depends significantly on timely and appropriate government policy
and regulatory changes, immediate actions from national and regional
governments, new technological innovation, changes to supply and demand
systems within industries, customer behaviour and market sentiment. In
addition, there is significant uncertainty about how climate change and the
world's transition to a net-zero economy will unfold over time and how and
when climate and other sustainability-related risks will manifest. This could
adversely impact profitability, market stability and the resilience of
financial institutions, including NWM Group. In addition, the transition may
affect NWM Group's customers and businesses across sectors in different ways
and at different levels of risk. These timeframes are considerably longer than
NWM Group's historical and current strategic, financial, resilience and
investment planning horizons. Transition risks may also trigger reputational
and liability exposures, especially if NatWest Group (including NWM Group) is
perceived as not meeting its climate ambitions, targets and commitments, or
not making progress against NatWest Group's climate transition plan.

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

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

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

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

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

NatWest Group has an ambition to be net zero across its financed emissions,
assets under management and operational value chain by 2050. NatWest Group
also has an ambition at least to halve the climate impact of its financing
activity by 2030, against a 2019 baseline, supported by portfolio-level
activity-based targets. NatWest Group may also announce other climate and
sustainability-related ambitions, targets and commitments and may withdraw,
retire, amend, replace or supersede existing ones from time to time, whether
or not they have been achieved, where it considers this to be appropriate
having regard to its strategic objectives, or where required or appropriate to
do so by applicable law, regulation or supervisory expectations.

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

NWM Group's ability to contribute to achieving NatWest Group's strategy,
including its climate and sustainability-related ambitions, targets and
commitments, and to contribute to implementing NatWest Group's climate
transition plan is dependent on many factors and uncertainties beyond NWM
Group's control. These include (but are not limited to): (i) the extent and
pace of climate change, including the timing and manifestation of physical and
transition risks and nature loss; (ii) the macroeconomic environment; (iii)
the effectiveness of actions of governments, legislators, regulators and
businesses; (iv) the response of wider society.

NWM Group's Value Chain and other stakeholders to mitigate the impact of
climate and sustainability-related risks; (v) changes in customer and societal
behaviour and demand; (vi) availability of commercially viable opportunities
in sustainable finance markets, competition dynamics, capital markets
appetite, investor expectations, and external credit and concentration risk
appetites which may constrain the scale or risk profile of opportunities
accessible to NWM Group ; (vii) developments in available technology; (viii)
the rollout of low carbon infrastructure; and (ix) the availability of
accurate, verifiable, reliable, auditable, consistent and comparable data.

These external factors and other uncertainties may make it complex for NWM
Group to contribute to achieving NatWest Group's climate and
sustainability-related ambitions, targets and commitments, and to contribute
to implementing NatWest Group's climate transition plan, and there is a risk
that some or all of NatWest Group's (including NWM Group) climate and
sustainability-related ambitions, targets and commitments may not be achieved,
or NatWest Group's climate transition plan may not be implemented within the
intended timescales, or at all.

Moreover, the rising energy demand associated with artificial intelligence
workloads, whether generated internally or through third‑party providers,
may increase NatWest Group's (including NWM Group's) own operational
footprint. While NatWest Group (including NWM Group) has taken initial steps
to assess the potential impacts of increased artificial intelligence usage,
its full effects on NatWest Group's (including NWM Group's) own operational
footprint remain uncertain but could have an adverse effect on achieving
NatWest Group's (including NWM Group's) climate and sustainability-related
ambitions, targets and commitments and the implementation of NatWest Group's
climate transition plan.

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

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

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

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

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

NWM Group's internal capabilities to assess, model, report on and manage
climate and sustainability-related risks continue to evolve. However, even
when such capabilities are suitably developed, the high level of uncertainty
regarding any assumptions modelled, the highly subjective nature of risk
measurement and mitigation techniques coupled with persistent data gaps may
result in inadequate risk management information and frameworks, or
ineffective business adaptation or mitigation strategies or regulatory
non-compliance.

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

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

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

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

At the same time, regulatory and enforcement approaches to climate and
sustainability-related matters are increasingly diverging and, in some cases,
conflicting across jurisdictions. While some authorities are advancing
stricter requirements, others are introducing sanctions targeting institutions
that pursue climate and sustainability-related initiatives.

Furthermore, NWM Group may face litigation, complaints or other forms of
challenge from shareholders, customers, campaign groups or other stakeholders
arising from allegations of actual or perceived environmental or social harm,
including climate-related impacts, nature-related degradation, human rights
abuses, or deficiencies in governance and due diligence practices. At the same
time, NWM Group may face contradictory legal or regulatory action asserting
that it has placed undue or disproportionate focus on climate and
sustainability‑related considerations.

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

 

Legal Entity Identifier: RR3QWICWWIPCS8A4S074

 

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