WOMEN IN BUSINESS UK FORUM

EXCLUSIVE INTERVIEW WITH THE CEO OF NATWEST GROUP, ALISON ROSE

22 SEPTEMBER

Alison Rose, chief executive officer, NatWest Group

In conversation with Patrick Jenkins, deputy editor, Financial Times

Page 1 In November, when Alison Rose was appointed chief executive of – now rebranded as NatWest Group – she became the first woman to run a large British bank.

Ms Rose has been at the bank for 27 years, having joined RBS as a graduate. She was most recently deputy chief executive of NatWest Holdings and chief executive of RBS’s commercial and private banking business.

In this exclusive interview with Patrick Jenkins, deputy editor of the Financial Times, Ms Rose spoke of her career so far, the strategic changes she has made, and how the business is adapting to the shock of Covid-19.

This report is a summary of the key take-outs from the event.

IN AT THE DEEP END

In February, three months into her role, Ms Rose unveiled her strategy to her colleagues. Within a fortnight, Covid-19 was upon us and the UK was heading for a national lockdown.

“I can safely say a global pandemic wasn’t in my plan,” she said. “But that’s the nature of economics and the industry: you deal with the unexpected.”

Ms Rose met the challenge head-on and the business quickly adapted to having its 50,000 employees work from home.

Her strategy included a new purpose for the bank: to become a business led by relationships rather than transactions, to create value for shareholders but also for customers and communities. This plan is still on course despite the Covid disruption.

Her three themes are tackling barriers to enterprise and entrepreneurship; building financial confidence and empowering customers, and taking a leading role in addressing climate change.

NATWEST AND THE OVERHAUL OF BANKING CULTURE

Mr Jenkins pointed out that NatWest is a different organisation to what it was in 2001-09, during the macho reign of Fred Goodwin, known as “Fred the Shred”, and under other managements.

He asked Ms Rose how she has seen the business change.

She replied that banking can be viewed in terms of pre-financial crisis and post-financial crisis. She said it is a team-based and service-based business, and problems arise when you lose focus on customers.

Since 2008 there has been a shift from banks thinking about making money to thinking more about how to support customers. “Always remembering that you have a customer […] is just fundamental to driving the right outcomes,” she said.

FROM GRADUATE TO CHIEF EXECUTIVE

“I joined the bank at the start of my career, not really having a long-term plan, thinking I would travel the world and have an interesting job working with bright people,” said Ms Rose. “One of the great things about banking is you can have 100 different careers in one organisation, so I tried lots of different things.”

Page 2 In her first few years at the investment bank she was one of a few women in a male environment. With a lack of role models, she discovered the importance of sticking to her values. “I very much took the view that I was going to be myself,” she said, urging the audience: “Don’t try to be someone you’re not. Beg, borrow, steal all the learnings you can but don’t compromise.”

How did she get to the top job, the audience wanted to know.

“My HR team always tells me off when I say this: it was never in my plan,” said Ms Rose. She said her focus had been on finding a job she enjoyed.

Being a team player was key, as was learning and building skills: “I’m still learning, and that’s what motivates me.”

There were pivotal moments. She accepted an offer to run the bank’s global portfolio management business after rejecting the post three times.

She was worried about the risk. “I had always run client businesses,” she said. The new job was daunting: “Strategic, global, leadership, non-client facing – all of the things [that] if you’d asked me what I wanted out of a career I would have said ‘no’ to ... it was basically restructuring the global balance sheets on the banking side of the investment bank.”

She said, though, that it was probably the job that “taught me more about myself than anything else, and probably took me to the next level”.

Making the jump from middle management to a senior role meant a move from being an expert on subject matter to a position that involved enterprise-wide leadership and being able to delegate.

BALANCING PERSONAL AND PROFESSIONAL RESPONSIBILITIES

“When my children were babies I had different priorities,” said Ms Rose. She spoke of the importance of “being really clear on what matters to me … not giving myself a hard time, but recognising the balances”.

“When I had my daughter there was an assumption that there was no way I could go back to the job I had been doing. I was doing deals 24/7,” she said. “It’s really important to challenge the assumptions. I did come back, I did continue running deals. And within four years I was running the whole team and the department.”

THE DECISION TO REBRAND AS NATWEST

Mr Jenkins said the idea to rebrand RBS as NatWest had been considered for years, partly because of the damage to the RBS brand from the 2008 collapse, when the bank was bailed out by the government.

Previous management had not gone through with the change, in part because of fears that it could be seen as refuting the bank’s Scottish roots.

“The change in the group name was a really logical step,” said Ms Rose. “I was cognisant of both how it would be interpreted and what it really meant. It comes back to how much the bank has changed.”

There was a backlash in Scotland, said Mr Jenkins, but Ms Rose said that putting everything under the NatWest name made sense, because NatWest represented 80 per cent of the group’s customers. “Scotland is really important to us and that hasn’t changed,” she said.

Page 3 MAKING A TOUGH CALL ON THE INVESTMENT BANK

The investment arm of the bank was an engine of growth up until the financial crisis but its importance has dwindled since. Ms Rose made the decision early on to close the investment operation.

“NatWest Markets in its current form was not sustainable,” she said. “It was representing 20 per cent of the capital of the group; it was loss-making and did not have the scale to operate under the ambitions that it had previously had.

“You have to be really decisive to solve these problems. Ignoring it just means it’s going to get worse. Being a CEO is not about the easy decisions; it is about the tough ones.”

THE CHALLENGE OF INTEREST RATES

Covid-19 and low interest rates had made business tough for banks, said Mr Jenkins. He asked how Ms Rose planned to offset the squeezing of margins.

She said her original strategy was to make sure the bank could deliver returns in a lower-interest rate environment. For that, she would lean on the strong customer franchises, which continue to grow.

One silver lining from the Covid disruption is the acceleration of the shift to digital. Mr Jenkins asked if the bank would need fewer branches.

NatWest’s branches stayed open throughout the crisis, said Ms Rose, though there was an 85 per cent dip in activity during lockdown.

She acknowledged that the bank would have to evolve in line with digital acceleration, but said it would continue to maintain the network, which currently combines branches with other “points of presence”.

PREPARING FOR A RECESSION

A recession would be bad news for banks’ loan default numbers, said Mr Jenkins, and it was inevitable that loan losses would jump. There is also a fear that the house price bubble will burst because of defaults on mortgages, creating a flood of properties that had to be sold quickly.

Ms Rose said her priority was to make sure the bank is robust and resilient. “Inevitably when you go through a downturn there are going to be some really tough times ahead. We’ve taken the economy into a hard stop and real contraction,” she said.

The bank had made provisions, she said. With strong capital and liquidity it can support customers, but the reality is that not all businesses will survive.

She said the bank was seeing a mini-boom in house purchases, however: “Our mortgage levels are back at pre-Covid levels but clearly commercial property, rents – those are all challenges.”

ON IMPROVING DIVERSITY IN FINANCIAL SERVICES

On the gender gap at the bank and in financial services more broadly, Ms Rose said: “As I’ve gone through my career I have worked with incredibly talented and amazing women who for one reason or another have not progressed.”

Page 4 She said the executive team at NatWest now included six women and “they are there because they are super-talented”.

The bank has a target to improve ethnic diversity as well. “It is about creating the right environment for people to thrive,” said Ms Rose, adding that diversity is an imperative. “I don’t want a group of people who sit around and agree with me; frankly, if you’re from the same background, gender, you’re more likely to have groupthink.

“That is fundamentally dangerous,” she said, adding that teams should be creative and disruptive.

THE GREEN AGENDA

How does a bank get out of financing companies that damage the world, asked Mr Jenkins.

Ms Rose said NatWest’s target was to halve emissions from its financing activity on its balance sheet over the next ten years. “That means working with the bank’s customers to come up with credible alternatives,” she said.

The bank would also track progress and report annually on what it invests in and disinvests from, she said. Climate goals are in the executive committee’s targets and remuneration plans.

REMOTE WORKING

One myth that has been busted by Covid is that you can only work in a particular way, said Ms Rose.

“We have definitely created more flexibility. For some colleagues it has been a fantastically empowering experience – not doing the commute, being more productive.”

For others it has been terrible, she acknowledged. The bank has been acutely aware of the need to be sensitive to the mental health and wellbeing of employees.

“Looking forward, it is [about] working out how to take some of the benefits of flexibility while also creating a culture of collaboration if you are all remote – and being sensitive to mental health.”

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