What could possibly go wrong!

Recently there were rumours that NatWest Bank was studying a bid for the wealth management firm Quilter. My immediate reaction was: “What could possibly go wrong?”  Why? Because both parties have made some serious mistakes quite recently.  And because most substantial consolidations have failed to generate benefits to shareholders, staff or customers. Standard Life and Aberdeen looks like a good example.

The Quilter mistake was failing to carry out effective due diligence when they acquired Lighthouse Group in 2019. They paid about £46M for the business but since then they have had to make provisions adding up to a similar number in respect of inherited pension transfer business. So, it cost them twice as much as they expected, and I wouldn’t be surprised if additional provisions emerged in the future.

The NatWest mistake was mind blowing. I write crime fiction (under the name Calum Kerr) and if I came up with a plot based on the NatWest story it would be considered too far fetched. If you want to know all the facts, there is a thirty-three page FCA document available but here is the main point: A company called Fowler Oldfield was a buyer and seller of gold. It was a small company owned by a husband and wife. Future sales were predicted to be £15m per annum. This was increased to £30m later on. Cash transactions were £18m.

From late 2013 numerous NatWest branches received cash sums of between £12m and £44m and, I quote, from the FCA document; “ situations which included the deposit of such large sums of cash that they were brought in, in black bin bags which tore because of their weight and sums so large that the bank’s safes were inadequate to store them.”

 NatWest were fined £397,156,944,14. But because they pleaded guilty this was reduced to £264,772,619,95. (Don’t you love the FCA feeling the need to include the last decimal points!)

What could possibly go wrong, went wrong. I wish I was surprised!