By Scott Wright

ROYAL Bank of Scotland owner NatWest Group has reported a pre-tax operating loss of £351 million for 2020, as its chief executive Alison Rose was forced to respond to questions over the location of the bank’s headquarters.

NatWest fell into the red after booking a net impairment loss of £3.2 billion for the 12 months to December 31, reflecting provisions for loan defaults arising from coronavirus. It made an operating profit of £4.2bn in 2019.

The 2020 provisions were lower than the £3.5bn to £4.5bn previously guided, as Ms Rose declared that defaults had so far been “relatively benign”. This was partly because of the continuing government schemes to support households and businesses.

The bank declared it would be resuming dividend payments after their suspension shortly after the pandemic took hold, and is recommending a final pay-out of 3p per ordinary share – the maximum it is permitted to pay – equal to £364 million.

Shares rose by 5.1 per cent to close at 180.15p last night.

Speaking on a call to journalists, Ms Rose was forced to clarify that the bank had not switched its headquarters to London from Edinburgh after comments made during a radio interview yesterday morning.

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Ms Rose was asked on Radio Scotland if NatWest was still a Scottish bank, and replied: “Scotland is a hugely important part of our business. Royal Bank of Scotland in Scotland is a brand we are very proud of. We are one of the largest lenders in Scotland. We support one in five people, one in three businesses, we have 96 branches. We are incredibly proud of our Scottish bank, and our commitment to Scotland, and the people of Scotland.”

Ms Rose later apologised if she had given the impression the bank was no longer headquartered in Scotland.

She told reporters: “There is no change to our head office. If that was misconstrued I apologise.”

The bank changed its corporate name to NatWest from Royal Bank of Scotland last year, and prior to the pandemic held up to half of its scheduled board meetings in Scotland.

Meanwhile NatWest, still 62%-owned by UK taxpayers further to its £45.5bn bailout at the height of the financial crisis, revealed it was withdrawing its Ulster Bank division from the Republic of Ireland in the coming years. The decision follows a review that concluded its business in the Irish Republic was not able to generate an “acceptable level of sustainable returns”.

Ms Rose said there would be no “compulsory departures or branch closures” in Ireland this year, adding that the move would not affect Ulster Bank in Northern Ireland.

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The bank has opened talks with prospective suitors for parts of Ulster Bank, and has signed a non-binding memorandum of understanding with AIB (Allied Irish Banks) Group, which has shown interest in a €4bn portfolio of “performing commercial loans”.

Ulster Bank currently has 88 branches and 2,600 staff in the Republic of Ireland.

NatWest said it advanced a total of £14.1bn of government-backed coronavirus loans, and provided around 258,000 mortgage holidays, last year in response to the pandemic.

The bank reported increasing use of its digital services. Asked if further branch closures were planned, Ms Rose said the bank would regularly review its network and that it would be guided by customer behaviour.

She declined to comment on speculation it had been holding talks with advisors over the sale of the bulk of its Adam & Co private bank.

The bank’s annual report, published yesterday, confirmed Ms Rose’s decision to not accept a long-term incentive award for 2020.

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Ms Rose received a total remuneration package of £2.6m for 2020, which included a base salary of £1.1m and an LTIP (long-term incentive plan) award of £650,000. The latter was granted prior to her becoming an executive director in 2018.

Ms Rose’s fixed share allowance was cut to £673,922 from £1.1m after she decided in April to forgo 25% of her total pay for the rest of the year in response to the pandemic. The fixed share allowance is not performance-related.

Chairman Sir Howard Davies, who also volunteered a pay cut last year, said there are “no plans at this point” to make similar changes to his or Ms Rose’s salary this year.