NatWest chief Alison Rose's £5m pay deal sparks outrage

NatWest’S boss made £5.2m last year as the bailed-out bank profited from charging borrowers more while not passing on rising interest rates to savers.

Alison Rose’s bumper pay packet, which was 46 per cent higher than the previous year, is even bigger than her counterpart CS Venkatakrishnan at Barclays and it is the highest declared for a bank chief executive so far this year.

It also means the 54-year-old earned 119 times more than the average NatWest worker received.

The news came as NatWest – which is still 46 per cent owned by the taxpayer after being bailed out in the financial crisis – posted profits up more than a third to £5.1billion last year and launched an £800m share buyback.

The jump was fuelled by a big rise in net interest income – the difference between what a bank charges borrowers for loans and mortgages and what it pays savers in interest. That rose to £9.8billion, £2.3billion more than in 2021.

In the firing line: Alison Rose’s bumper pay packet was 46 per cent higher than the previous year

But shares tumbled nearly 7 per cent after it warned rising interest rates may not deliver the long-lasting earnings bonanza investors hope for.

NatWest warned that its net interest margin would remain at the fourth-quarter level of 3.2 per cent this year. Analysts had expected an increase to 3.38 per cent following a series of rate rises by the Bank of England.

MPs recently accused banks of cashing in at the expense of loyal customers and cautious savers after a series of recent hikes by the Bank pushed the benchmark base rate to 4 per cent.

The typical cost of a five-year fixed-rate mortgage has almost doubled to 5.2 per cent, compared to 2.7 per cent a year earlier, according to financial website Moneyfacts. But savings rates remain abysmally low, with the average high street bank’s easy access savings account still paying interest of less than 2 per cent a year.

‘Banks have taken advantage of the sharp rise in interest rates over the past year, passing the lion’s share of the benefits onto their shareholders rather than their customers,’ said James Daley of consumer group Fairer Finance.

‘Even after they’ve been challenged by MPs, they have brazenly stuck to their guns.’

Rose said the bank was yet to see ‘significant signs of financial distress among our customers’ but added it was ‘acutely aware that many people and businesses are struggling right now and that many more are worried about what the future holds.’

She also defended the bank’s treatment of savers, highlighting an online-only account that pays depositors 6 per cent in annual interest.

However, that falls to 0.65 per cent if more than £5,000 is paid in.

‘How can NatWest justify paying 0.65 per cent on their instant access accounts when base rate is six or seven times higher?’ said Fairer Finance’s Daley. ‘Consumers are left with no choice but to vote with their feet.’

Rose was not the only NatWest banker to enjoy the pay bonanza.

Finance director Katie Murray got £3.6m – £2m more than the previous year – while half of the bank’s 60,000 staff will share a £368m bonus pool.

Mortgage rates have come down from a peak of 6.7 per cent when former chancellor Kwasi Kwarteng’s mini-Budget in September caused government borrowing costs, which set the price of fixed-rate home loans, to soar.

More than nine out of ten NatWest mortgage holders are on fixed rates, Rose said.

The base rate, which determines the price of default standard variable ‘tracker’ mortgages, has ballooned from 0.1 per cent just over a year ago as the Bank of England tries to curb double-digit inflation.

NatWest was rescued with a near £50billion bailout in the depths of the financial crisis. A significant portion has been owned by the Government ever since, making taxpayers the biggest shareholder.

As well as the bumper share buyback, NatWest will pay a £950m dividend taking its total paid out to shareholders this year to £illio.

That includes a £2.6billion windfall to the Government because of its holding in the bank.

NatWest also set aside £337m last year to cover potential loan defaults, though this was lower than analysts had feared.

NatWest was the second of the big listed lenders to report results for last year after Barclays earlier in the week. HSBC and Lloyds will follow next week. Like NatWest, they are also expected to have reaped the benefit of boosting their profits thanks to rising interest rates over the year.