Natwest Chief Executive's Compensation Balloons to £6.6 Million
Paul Thwaite, the chief executive of Natwest, has defended a substantial increase in his remuneration package for the last financial year, as the banking group distributed significant sums in employee bonuses. Thwaite, a 26-year veteran of the bank who was appointed interim chief executive in July following Alison Rose's departure, received a total package worth £6.6 million.
Pay Hike Reflects Performance and Policy Changes
This figure represents a 33 per cent rise from the £4.9 million he earned in 2024. Thwaite acknowledged the high level of compensation for senior roles in financial services, stating on Friday that there is a direct link between reward and performance. The increase elevates his pay to levels not seen since before the financial crisis, making it the highest since Fred Goodwin's £7.7 million package in 2006.
Under a new remuneration policy approved at Natwest's Annual General Meeting, Thwaite has the potential to exceed Goodwin's record if maximum performance targets are achieved. The policy increased the maximum annual bonus to 150 per cent of base salary from 100 per cent and introduced a new performance share plan capped at 300 per cent of salary.
Record Profits and Bonus Pool Expansion
The enhanced pay package follows Natwest's achievement of a post-financial crisis high profit of £7.7 billion in the 2025 financial year, up from £6.2 billion the previous year. In line with this performance, Natwest allocated approximately £495 million in employee bonuses for 2025, marking a 10.8 per cent increase from the 2024 bonus pool.
Post-Brexit Deregulation Drives Bonus Changes
Thwaite's compensation benefited significantly from the City of London's abandonment of the European Union's bonus cap, which previously restricted bonuses to 100 per cent of fixed salary or 200 per cent with shareholder approval. This cap was originally implemented to discourage high-risk decision-making by senior bankers following the financial crash.
Post-Brexit Britain eliminated the cap during Kwasi Kwarteng's brief tenure as Chancellor, aiming to attract senior bankers back to London. This controversial move, part of Kwarteng's so-called 'mini-budget,' remains one of the few policies from that period not overturned by subsequent chancellors.
Regulatory Overhaul Accelerates Bonus Payments
The banking watchdog introduced new rules last year that enable bankers to receive their bonuses much sooner as part of a broader deregulation initiative. These changes allow for partial payment of bonuses to the most senior bankers starting from the first year, rather than after three years as under previous regulations.
Additionally, the deferral period—the time senior bankers must wait before receiving their full bonus—has been reduced from eight years to four years. This regulatory shift has paved the way for the substantial increases in both executive pay and overall bonus distributions at Natwest and across the banking sector.
