London, June 17, 2026, 11:04 BST
- NatWest traded higher in London morning dealing, extending Tuesday’s gain, while UK bank shares drew support from a calmer rates backdrop.
- The lender priced $1.25 billion of senior callable notes due 2032, adding a funding update to the equity story.
- UK inflation held at 2.8% in May, keeping attention on Thursday’s Bank of England rate decision.
NatWest Group Plc shares rose in London on Wednesday, adding to a sharp gain in the previous session, as investors weighed a fresh debt issue from the UK-focused bank against softer-than-expected inflation data.
Delayed market data showed NatWest at 633 pence, up 0.7%, with recent trades around 10:46 BST. The stock had opened at 630.8 pence after closing at 628.6 pence on Tuesday, and remained below its 52-week high of 705.4 pence.
The move matters because UK bank shares are trading around two live questions: how long interest rates stay high enough to protect lending margins, and whether borrowers can cope if inflation proves sticky. The Office for National Statistics said the Consumer Prices Index rose 2.8% in the 12 months to May, unchanged from April.
NatWest said on Tuesday it had priced $1.25 billion of 4.983% senior callable fixed-to-fixed reset notes due 2032. Senior notes are debt that ranks ahead of subordinated debt if a bank is wound down; callable means the issuer can redeem the bonds early under stated terms. Proceeds will be used for the bank’s general banking business, with the offering scheduled to close on June 18.
The tone was broadly constructive for UK lenders. Barclays rose about 2.0% and Lloyds Banking Group gained 0.6% in London, according to delayed pricing, while the wider UK blue-chip index was little changed as falling oil prices weighed on energy majors.
The Bank of England’s current Bank Rate stands at 3.75%, with its next decision due on June 18. Bank Rate is the central bank’s main policy rate and helps set borrowing and savings costs across the economy.
“Today’s data strengthens the case for a continued cautious approach from the Bank of England,” Yael Selfin, chief economist at KPMG, said after the inflation release. Rob Wood, chief economist at Pantheon Macroeconomics, was less relaxed: “A chunk of inflation is locked in the system now,” he said. Reuters
For NatWest, higher rates have helped earnings, but the bank has also had to price in a more difficult UK backdrop. In first-quarter results, Chief Executive Paul Thwaite said NatWest’s “strong performance” reflected delivery for customers and shareholders, with attributable profit of 1.4 billion pounds and return on tangible equity of 18.2%. Return on tangible equity is a measure of profit made on shareholders’ tangible capital. NatWest Group Investors
Capital returns remain part of the case for the shares. NatWest disclosed last week that it had bought 3,451,759 ordinary shares between June 8 and June 11 through UBS, with the stock intended for cancellation. Buybacks can support earnings per share by reducing the share count, though the effect depends on price and future profits.
The risk is that the rate story cuts both ways. Faster rate cuts would ease stress on households but could squeeze net interest income, the gap between what a bank earns on loans and pays on deposits. A renewed rise in inflation or energy prices could do the opposite, keeping rates high while raising impairment charges — money set aside for loans that may not be repaid. NatWest took a 283 million pound impairment charge in the first quarter, including 140 million pounds linked to weaker economic forecasts tied to the Middle East conflict.
