ALEX BRUMMER: Banks face a fintech coup

The long and winding road back for NatWest from oblivion to robust domestic lender is complete.

Paul Thwaite, the bank’s chief executive post state shareholding, can enjoy the new freedoms.

He has made no secret of his ambition to build on NatWest’s already powerful presence through acquisition.

As a standalone franchise, NatWest can now say what it thinks again. We know what happened to Thwaite’s predecessor Alison Rose when judged to have spoken out of turn about the banking relationship between NatWest’s posh offshoot Coutts and Reform leader Nigel Farage.

NatWest’s chief and his opposite number at Lloyds Charlie Nunn speak as one.

With bank profits soaring and some Government members and backbenchers eyeing up the finance and wealth as tax targets, they are concerned.

One can see why Labour might regard NatWest’s first half operating profits of £3.6billion, up from £3billion in the same period last year, as easy meat. If the bank can afford to buy back £1.5billion of its shares this year, recompense for taxpayers might seem in order. Indeed, the bank has increased its income guidance for the full year to £16.5billion from £16billion.

Partly that reflects additional income from the Sainsbury’s bank deal, as well as lower than expected bad loans.

Good times do not last forever and a profitable bank, with healthy capital, ought to be good for UK growth. NatWest, Lloyds and the other banks have no room for complacency.

A note from NatWest-RBS neighbours in Edinburgh, Scottish Mortgage, run by Baillie Gifford, extols fintech. It praises pioneers Stripe, Wise, NuBank, SEA, Revolut and others for building ‘scale financial systems’ and broadening access. Unless the incumbents can catch the digital train, High Street lenders could – like IBM – become sunset companies, as Microsoft, Nvidia et al sprint off with the prizes.

Powell play

After ugly scenes in the Oval Office in February, when Donald Trump berated Ukraine’s President Zelensky, it might have been hoped self-restraint had been learned. Trump was at it again on Thursday. This time, the victim was Federal Reserve chairman Jay Powell.

Trump, as a real estate magnate, has an expertise in renovation, yet quite why he felt it necessary to don a hard hat and tour the repairs to the 90-year-old Fed headquarters is puzzling. As the two men toured, with Trump towering over the diminutive Powell, it was an obvious ambush. Trump magicked a piece of paper from his pocket and questioned alleged $3billion of costs and an overrun.

The clash had little to do with concrete and plumbing, and everything to do with central bank independence. Trump is engaged in a crude campaign to bully Powell into cutting the key Fed funds rate from 4.25 per cent to 4.5 per cent to support output. The greater the pressure, the more likely it has been that Powell would hold the line. He has nothing to lose by being obdurate. His most notable legacy could be his bravery in standing up for the Fed.

Fashion refit

The controlling Lewis family is taking flack for playing hardball with River Island landlords and reshaping its retail portfolio. The objective is to keep the brand on the High Street in long-term ownership rather than condemn it to administration or rapacious private equity ownership.

That rarely ends well.