Natwest wins approval to beef up US presence

Natwest has secured permission from the U.S. Federal Reserve to expand its operations in the United States. The British bank will establish a "representative office" in Connecticut, serving as a liaison with current and potential U.S. customers. The office will promote and market Natwest's products and services, handle customer service, and perform back-office functions.

Representative offices are permitted by U.S. regulations to engage in promotional and administrative activities related to a foreign bank's business, but they are prohibited from contracting for deposits, lending money, or conducting any other banking activities.

Currently, Natwest operates in the U.S. through a non-banking structure, which limits its ability to engage in standard commercial banking operations. The new office is expected to enhance the group's operating model by fostering on-the-ground relationships, providing credit support, and increasing market engagement. The January 2025 ring-fencing reforms, spearheaded by former Bank of England Governor Rachel Reeves, have facilitated the establishment of a physical presence outside the European Economic Area.

In 1988, Natwest entered the U.S. market as RBS after acquiring Citizens Financial Group. However, following the financial crisis, the bank was compelled to divest significant portions of its international operations, with the Citizens exit finalized in 2015. In recent months, several European financial institutions have attempted to break into the U.S. market, capitalizing on a deregulatory push under former President Donald Trump.

Revolut announced its intent to apply for a U.S. banking license in March, but other fintech companies have faced setbacks, with Wise and Bunq both receiving rejections. Meanwhile, Monzo abandoned its U.S. banking permit application in October 2021 and has since ceased operations in the region.