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As the UK Government Prepares to Exit, Bankers’ Bonuses and Executive Pay Spark Debate
NatWest is proposing a substantial 43% increase in its chief executive’s maximum compensation as it nears full privatization, marking a pivotal moment nearly 17 years after the bank was rescued by taxpayers during the 2008 financial crisis.
A New Pay Structure for NatWest’s CEO
Formerly known as the Royal Bank of Scotland, NatWest paid CEO Paul Thwaite $6.2 million in his first full year leading the bank in 2024, just shy of his maximum potential earnings of $6.8 million. Now, under a new proposal, his total compensation could rise to $9.7 million annually. Furthermore, if NatWest’s share price increases by 50%, Thwaite’s earnings could reach $12 million, as a significant portion of his pay is linked to stock-based bonuses.
Surging Banker Bonuses Amid Privatization
The proposed pay hike coincides with a broader rise in banker bonuses at NatWest, with the bank increasing its bonus pool by 24% to $563.6 million—its highest level since 2013. This move reflects NatWest’s anticipation of a transition to full private ownership later this year.
The UK Treasury initially injected $58 billion into the bank during the financial crisis, leaving taxpayers with an 84% stake. Over the years, that ownership has been steadily reduced to less than 7% through gradual share sales, a process expected to conclude by mid-2025. A previous plan to sell shares directly to the public, fronted by broadcaster Sir Trevor McDonald, was ultimately abandoned.
Rising Profits and Dividends
Despite the executive pay increase, NatWest reported only a modest 0.3% rise in pre-tax profits for 2024, bringing the total to $7.8 billion. The bank also announced a $1.5 billion year-end dividend payout, a portion of which—approximately $105.8 million—will go to the UK government based on its remaining stake.
Backlash Over Pay Culture
While Thwaite’s proposed pay package will require shareholder approval at NatWest’s annual general meeting in April, it has already sparked criticism. Some financial watchdogs argue that reintroducing a high-bonus culture could reignite the same issues that contributed to past financial instability.
Luke Hildyard, executive director of the High Pay Centre, warned that as the memory of the financial crisis fades, banks and corporations are reverting to compensation models that exacerbate economic inequality and increase systemic risks. “This trend is neither desirable nor beneficial for the broader economy,” he cautioned.
As NatWest moves toward full privatization, the debate over executive pay and banking culture is set to intensify, raising fundamental questions about corporate governance, economic fairness, and the role of financial institutions in post-crisis Britain.
