Why Natwest splashed the cash for a slice of the wealth management pie
Natwest has opened its wallet for its biggest deal since the financial crisis, as the bank revives its appetite for acquisitions after the remaining government-owned shares in the business were finally sold.
But after the FTSE 100 firm watched its share price sink into the red on Monday, will there be a sense of buyer’s remorse?
The bank splashed a whopping £2.7bn to snap up Evelyn Partners – significantly more than some shareholders had expected – taking the wealth manager out of the hands of private equity owners Permira and Warburg.
The move also thrusts Natwest deeper into the wealth management space – an area where UK banks are desperate to gain a foothold.
“It creates our third growth engine within the group,” chief executive Paul Thwaite said on Monday.
Taking Evelyn’s £69bn assets under management under the Natwest umbrella, the bank will now boast a total of £127bn assets, making it the largest of the bank-owned wealth managers.
Though that still leaves the firm behind other specialist non-bank wealth managers such as St James Place, which has around £199bn.
By Monday afternoon, Natwest had tumbled nearly eight per cent to 608.40p, reversing the past month of gains.
Gary Greenwood, equity analyst at Shore Capital, said the move was “strategically logical” as part of the bank’s ambition to ramp up its wealth management offer but warned “caution on the deal’s economics, which rely heavily on synergy delivery to justify the price”.
The price tag marks a 9.7x multiple on Evelyn’s latest £179m in earnings, but includes the amount of annual expenses the bank plans to cut once the two companies are fully combined.
The group has promised £100m in annual cost savings, but will involve £150m of spending to achieve this – though this has the potential to climb if the integration doesn’t go smoothly.
The deal also eats up 130 basis points of Natwest’s CET1 ratio – which serves as a major benchmark of a bank’s financial health.
Still, Natwest’s top team is confident it will have more than just a hefty receipt to tout to shareholders.
Finance boss Katie Murray insisted “this is not a situation where we’ve overpaid”.
The returns would be “greater than a share buyback,” she added, which comes after Natwest promised to put future share purchase programmes on hold until the first half of 2027 following the deal. The bank did launch a £750m scheme simultaneously with the deal announcement in a bid to sweeten the news.
Natwest beats rivals to wealth push
Over the last week, Natwest is faced off against rivals to snap up Evelyn.
Barclays was gearing up to table a £2bn, according to Sky News, as the bank pursues its own wealth ambitions.
Banking giants have ramped up plans for a wealth management push in the last year with the division offering lenders a less volatile and more capital-light source of income, due to its reliance on recurring fees rather than the interest rate fluctuations that affect traditional lending.
“We are somewhat surprised Natwest appears to have come out on top, given how tightly the chief executive holds the bank’s purse strings,” Benjamin Toms, analyst at RBC, said as reports broke that Natwest had emerged the most likely contender.
Toms added whilst it marks a “bolt on transaction,” it would still be “transformational,” filling the bank’s gap in its affluent wealth offering and making it the third largest wealth manager in the UK, as per RBC analysis.
Natwest has exposure to the wealth market through Coutts, which is renowned for serving the ultra-high-net-worth with a cool £1m entry requirement to open an account.
This differs from the base of Evelyn which focuses on the mass affluent and professional classes in search of smart, tech-led advice to grow their nests.
The new climb up the rankings is set to pile the pressure on FTSE 100 rivals Lloyds and Barclays, whose bosses have made scaling wealth divisions a key part of their growth strategy.
Barclays has doubled down on its private bank division, where total income reached £697m in the first half of 2025, in boss CS Venkatkrishnan’s mission to reduce reliance on the low-returning investment bank.
Meanwhile, Lloyds’ Charlie Nunn brought a flavour of his old role when he took to the helm at the bank in August 2021.
The former head of wealth and personal banking made expanding Lloyds mass affluent range one of his defining missions with targets including increasing high net worth clients’ total holdings with the bank – everything from savings to pensions and investments – by over ten per cent.
The timing of Natwest’s deal also arrives as the City watchdog and government move to close the UK’s “advice gap” where millions of mass affluent savers have racked up a major strap of cash but not enough to interest the elite level private banks, like Coutts.
Under the new Targeted Support Regime, set to launch in April 2026, banks will finally be permitted to offer simplified investment suggestions to retail customers.
Natwest’s transaction will allow it to absorb Evelyn’s hybrid-advice technology and consumer-facing platform Bestinvest, effectively handing it the mechanics to ramp up the investment opportunities for its customers.
“It should really just reduce the complexity in providing advice and help get more customers get more out of their money,” Thwaite said.
“Strategically, this transaction is very much supported by that.”