It’s been a brutal week for the directors and staff of Big Four bank NatWest Group (LSE: NWG). Since closing at 260.5p on Wednesday, 18 July, NatWest shares have dropped by 7.3%. But what shook the bank’s shareholders into selling?
NatWest versus Nigel
Unfortunately for the former Royal Bank of Scotland group, NatWest got into a very public war of words with outspoken populist politician Nigel Farage. Last week, Farage claimed that the group had closed his account with blue-blooded bank Coutts because of political risks.
Coutts and NatWest fired back, claiming they shut Farage’s account because his assets and borrowings had fallen through minimum levels for Coutts customers. But Farage claimed that evidence he’d acquired through a broad-based data-protection request suggested otherwise.
Initially, the bank’s chair and its directors backed CEO Dame Alison Rose, despite her incorrect briefing of a BBC journalist on this issue. Then Dame Alison abruptly resigned on Wednesday morning, following government pressure for her to go. What a carry on!
NatWest shares take a hit
At the current share price of 241.57p, NatWest stock is down 3.8% today, valuing the group at £21.6bn. Here’s how the shares have performed over six other periods:
| Five days | -7.8% |
| One month | +4.6% |
| Year to date | -8.9% |
| Six months | -20.8% |
| One year | -2.2% |
| Five years | -10.1% |
Apart from a near-5% rise over one month, NatWest stock has fallen over all five other periods. Notably, it has dropped by more than a fifth in the last six months, driven down by a US banking crisis.
Looking at this table, I suspect that this ‘Farage farrago’ is nothing but a storm in teacup. However, with HM Government owning 38.6% of the bank’s stock, its directors must be feeling the heat today.
This FTSE 100 share is on my buy list
As it happens and following recent slides, this FTSE 100 stock has been on my list of stocks to buy for at least a month. At their 52-week high on 2 February, the shares briefly touched 313.1p. Today, they languish 22.8% below this peak.
For the record, I don’t own any NatWest shares yet, but I intend to buy some soon, despite this issue. After all, the stock trades on a modest multiple of under 6.3 times earnings, for a hefty earnings yield of 16%. Also, the bank’s chunky dividend yield of 5.7% a year is covered more than 2.8 times by earnings.
Then again, British consumers are seriously struggling nowadays, battered by rising interest rates, sky-high inflation and colossal energy bills. Therefore, I fully expect UK bank’s revenues, earnings and cash flow to be lower this year than in 2023.
Even so, with NatWest shares offering a market-beating cash yield with scope for further uplifts, it remains firmly on my list of favourites.
