NatWest books £300m in legal fees to deal with money laundering fallout

NatWest has set aside nearly £300m in legal fees to deal with the fallout of admitting it allowed money laundering to take place in the bank.

The bank announced in its third quarter results that it booked a £294m litigation and conduct charge during the period.

NatWest recently became the first British bank to admit to a criminal money laundering charge under a 2007 money laundering law.

The City watchdog, the Financial Conduct Authority, accused the bank, formerly known at Royal Bank of Scotland and partly owned by the government, had failed to monitor money laundering activity by a client that deposited about £365m in its accounts over five years.

Despite the charge, the bank registered a tripling in pre-tax profits in the third quarter of the year

Profits climbed to £1.1bn in the three months to September, up sharply from £355m over the same period a year ago.

The bumper set of third quarter results adds to the string of robust earnings from fellow UK banks Barclays, Lloyds and HSBC, indicating the sector is in rude health.

Alison Rose, chief executive of NatWest, said: “Although we are seeing challenges in the economy and for our customers – especially around supply chains and the cost of living – a number of key indicators remain positive; growth is good, unemployment is low and there are limited signs of default across our book.”

“We have a vital role to play in helping the 19 million people, families and businesses we serve in communities throughout the UK to thrive. Because when they thrive, so do we.”

The bank’s common equity tier one ratio, a measure of the strength of a bank’s balance sheet, hit 18.7 per cent.

NatWest’s net interest margin, one of the lowest in the sector, shrank six percentage points to 2.34 per cent. Customer deposits swelled £9.1bn over the quarter.