SIR Howard Davies has revealed his intention to step down as chairman of NatWest Group, owner of Royal Bank of Scotland.

In a speech to shareholders at the bank’s annual meeting at Gogarburn in Edinburgh this morning, Sir Howard said he expects his successor to be appointed before July next year. He has been chairman since September 2015.

After taking shareholders through a number of other changes to the board that have been made since the bank’s last AGM, Sir Howard said: “Now is also an opportune time to update you on my own position. I am approaching the point where I will have served eight years on the board so it is appropriate to initiate the search for my successor as chairman in the coming months.

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“This will allow time for a rigorous search process and an orderly handover, which I expect will take place at some point before I reach nine years tenure in July 2024. That is the maximum recommended in the UK Corporate Governance Code. The search for my successor will be led jointly by the senior independent directors of NatWest Group and NatWest Holdings.”

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Sir Howard told investors the bank had “performed strongly” in 2022 against a “difficult and economic backdrop”. And he said the impact of “uncertainty and rising interest rates” in the first few months of the year has been manifested by the collapse of Silicon Valley Bank and other regional lenders in the US, and the acquisition of troubled Credit Suisse by UBS.

Sir Howard said: “Ultimately, poor risk management and long-standing, idiosyncratic challenges were largely to blame for those failures.

“The NatWest Group, by contrast, has built a robust and resilient balance sheet with strong capital and liquidity, a largely secured retail loan book and well-diversified commercial lending.

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“Tight risk management underpins our strategy and ensures we are well-positioned for the future. We nonetheless continue to monitor customer activity and behaviours closely for signs of stress, taking action where appropriate.”

Sir Howard said the UK Government’s shareholding in the bank had been reduced to below 42 per cent, from 52% at the start of last year, following the sale of shares through a plan the Treasury said will continue until August 2025. “That is positive progress on the path to full privatisation,” Sir Howard said.

The bank became majority owned by UK taxpayers after its £45.5 billion bailout by the Government during the financial crisis of 2008 and 2009.