NatWest
Markets N.V.
2025 Annual Report
and Accounts
Financial review
NatWest Markets N.V.
Annual Report and Accounts 2025
1
Page
Financial review
Presentation of information
1
Description of business
1
Business developments
1
Performance highlights
2
Chief Executive’s statement
4
Summary consolidated income statement
5
Consolidated balance sheet
6
Top and emerging risks
7
Sustainability reporting approach
8
Risk and capital management
9
Corporate governance
49
Financial statements
Consolidated income statement
59
Consolidated statement of comprehensive income
59
Consolidated balance sheet
60
Consolidated statement of changes in equity
61
Consolidated cash flow statement
62
Accounting policies
63
Notes to the consolidated accounts
68
Parent company financial statements
101
Other information
118
Independent auditor’s report
119
Risk factors
127
Additional information
147
Forward-looking statements
147
Presentation of information
NatWest Markets N.V. (NWM N.V.) is a wholly owned subsidiary
of RBS Holdings N.V. (RBSH N.V.). ‘NWM N.V. Group’ or ‘we’
refers to NWM N.V. and its subsidiary and associated
undertakings. The term ‘RBSH N.V. Group’ refers to RBSH N.V.
and its subsidiaries, NWM N.V and RBS International Depository
Services S.A. RBSH N.V. is a wholly owned subsidiary of
NatWest Markets Plc (NWM Plc). The term ‘NWM Group’ refers
to NWM Plc and its subsidiary and associated undertakings. The
term ‘NatWest Group’ refers to NatWest Group plc and its
subsidiaries. NatWest Group plc (the ultimate holding company)
is registered at 36 St Andrew Square, Edinburgh, Scotland.
NWM N.V. publishes its financial statements in 'euro', the
European single currency. The abbreviation ‘€’ represents the
‘euro’, and the abbreviations ‘€m’ and ‘€bn’ represent millions
and thousands of millions of euros, respectively. The
abbreviations ‘£m’ and ‘£bn’ represent millions and thousands of
millions of pounds sterling (GBP), respectively, and references to
‘pence’ where amounts are denominated in pounds sterling.
Reference to ‘dollars’ or ‘$’ are to United States of America (US)
dollars. The abbreviations ‘$m’ and ‘$bn’ represent millions and
thousands of millions of dollars, respectively. The term ‘EEA’
refers to European Economic Area.
Description of business
firm serving corporates and financial institutions in the European
Economic Area. NWM N.V. helps corporate and institutional
customers manage their financial risks and achieve their short
and long-term financial goals while navigating changing markets
and regulation. NWM N.V. does this by providing global market
N.V. provides expertise and access to public and private
markets, funding and capital, leveraging market leading
structuring and risk distribution capabilities through the following
customer-facing businesses: Trading & Customer Sales and
Capital Markets. NWM N.V. is based in Amsterdam with
branches authorised in Frankfurt, Milan, Paris and Stockholm.
NWM N.V. Group is part of the NatWest Group Commercial &
Institutional (C&I) segment and its Corporate and Institutional
Banking (CIB) franchise.
The European Central Bank (ECB) is tasked with the prudential
supervision of RBSH N.V. Group. The Netherlands Authority for
the Financial Markets, Autoriteit Financiële Markten (AFM), is
responsible for market conduct supervision.
Business developments
•
In 2025, global markets were influenced by escalating
geopolitical and trade tensions, reversing export gains under
tariffs and contributing to a more fragmented political
landscape.
•
In June 2025, Isabelle Girolami was appointed as the Head of
the CIB franchise established in 2024 to unlock value for our
institutional and large corporate customers.
•
Following the December 2024 decision to designate NWM
N.V. as NatWest Group’s primary European corporate and
institutional customer-facing entity, a significant portion of
the assets of NatWest Bank Europe GmbH (NWBE) were
successfully transferred to the NWM N.V. Group during
2025. This transition was delivered under the European
Operating Model Simplification programme to ensure a safe
and secure delivery.
•
On 25 June 2025, Fitch Ratings upgraded NatWest Markets
N.V. to 'AA-' from 'A+' and its Short-Term IDRs to 'F1+' from
'F1'.
•
Aligned with the strategic priority to support disciplined
growth, NatWest Group has announced a new target to
provide £200 billion in climate and transition finance between
1 July 2025 and the end of 2030. NWM N.V. Group provided
€4.9 billion towards this new target between 1 July 2025 and
the end of 2025.
Financial review continued
NatWest Markets N.V.
Annual Report and Accounts 2025
2
Performance highlights
NWM N.V. Group reported an attributable profit of €133 million for 2025, down from €159 million in 2024, mainly due to a €45 million
decrease in net interest income and a €33 million increase in operating expenses.
This was partially offset by a €47 million increase in
non-interest income. Tax was a net credit of €45 million, up from €34 million in 2024, primarily reflecting additional recognition of
deferred tax assets of €51 million in 2025 compared with €40 million in the prior year.
Income and balance sheet
•
Total income was €303 million compared with €301 million in 2024, mainly reflecting an improvement in other operating income,
which was a loss of €26 million (2024 - €47 million loss), higher income from trading activities of €40 million (2024 - €21 million),
and a €7 million increase in net fees and commissions. These were partially offset by lower net interest income of €75 million
compared with €120 million in 2024.
•
Total assets decreased to €28.5 billion from €30.2 billion in 2024, mainly due to lower derivative assets, partly offset by higher cash
and balances at central banks. Total liabilities decreased to €26.4 billion compared with €28.2 billion in 2024, primarily reflecting a
reduction in derivative liabilities, partially offset by an increase in customer deposits.
Capital, liquidity and funding
•
NWM N.V. Group RWAs decreased to €7.9 billion from €8.6 billion at 31 December 2024, largely driven by a reduction in credit and
counterparty credit risk RWAs following Basel III-related implementations, partially offset by an increase in RWAs related to assets
transferred to NWM N.V. Group from NWBE.
•
NWM N.V. Group remained well-capitalised, with a NWM N.V. Group CET1 ratio of 18.5%, above guidance of ~14%.
•
The liquidity and funding positions also remained strong, with a LCR of 181% and a NSFR of 145%.
•
Capital, funding and liquidity remained closely monitored, with continued tracking and scenario analysis to ensure balance sheet
strength.
•
Throughout 2025, NWM N.V. Group ensured a stable funding base through various sources of funding, including the customer
deposit book, issuances of commercial paper, certificates of deposit, structured deposits, issuance of term notes and capital
instruments. In addition, NWM N.V. Group diversified it’s funding base further with a syndicated loan, providing €0.5 billion of
funding. During 2025, NWM N.V. Group issued €0.5 billion in senior unsecured notes through private placements under its Euro
Medium Term Note (EMTN) programme (2024 - €0.5 billion).
•
NWM N.V. Group maintains an active EMTN programme and may need to utilise it to raise funding, based on its current and
anticipated business activities. NWM N.V. Group therefore may be reliant on frequent access to the capital markets for funding, at
a cost that can be passed through to its customers.
Financial highlights
2025
2024
Performance
Operating profit before tax (€m)
88
125
Capital and liquidity
Common Equity Tier (CET1) ratio (%)
(1)
18.5
19.0
CRR leverage ratio (%)
6.2
7.2
Total capital ratio (%)
(1)
23.2
23.7
Liquidity Coverage Ratio (LCR) (%)
181
244
Net Stable Funding Ratio (NSFR) (%)
145
142
Risk-weighted assets (RWAs) (€bn)
(1)
7.9
8.6
(1)
Comparative capital ratios and RWAs as at 31 December 2024 (based on Basel III regulations applicable before the 2025 changes) have been restated to correct a prior period error in
the calculation of Counterparty Credit Risk RWAs. Total RWAs increased by €608 million, reducing the CET1 ratio from 20.4% to 19.0% and the Total Capital ratio from 25.5% to 23.7%.
Financial review continued
NatWest Markets N.V.
Annual Report and Accounts 2025
3
Non-financial highlights
2025
2024
Climate
Climate and sustainable funding and financing
(1)
€6.9bn
€12.2bn
Climate and transition finance
(2)
€4.9bn
na
Facilitated emissions (MtCO2e)
(3)
0.18
0.48
(1)
During H1 2025, NatWest Group exceeded the climate and sustainable funding and financing target to provide £100 billion between 1 July 2021 and the end of 2025. The number
disclosed above relates to NWM N.V. Group's contribution to the target for the 6-month period up to 30 June 2025. The NatWest Group Climate and Sustainable Funding and Financing
Inclusion (CSFFI) criteria, which underpinned the previous £100 billion target, has been retired. The CSFFI framework is available on natwestgroup.com.
(2)
In July 2025, Natwest Group announced a new target to provide £200 billion in climate and transition finance between 1 July 2025 and the end of 2030. The CTF framework has
been developed to expand the support provided to customers to achieve their climate and/or transition ambitions and is used to determine the assets, activities, acquisition targets
and companies that are eligible to be included towards the new £200 billion CTF target. The CTF framework is available on natwestgroup.com.
(3)
In 2025, NatWest Group continued to refine the methodology for estimating facilitated emissions and updated the scope for syndicated lending to exclude passive best-efforts roles,
ensuring only active facilitation is reflected.
Capital guidance
(1,2)
Metric
Estimate
CET1 ratio
~14%
Leverage ratio
>4%
(1)
This supersedes all prior guidance.
(2)
The guidance, targets, expectations and trends discussed in this section represent management’s current medium-term expectations and are subject to change, including as a result of
the factors described in the Risk Factors section in this document. These statements constitute forward-looking statements. Refer to Forward-looking statements in this document.
Financial review continued
NatWest Markets N.V.
Annual Report and Accounts 2025
4
Chief Executive’s statement
In 2025, we delivered a resilient operating performance while
continuing to support our customers with financing, risk solutions
and advisory services. Despite a year marked by geopolitical
tensions, unpredictable trade policies and broader macroeconomic
volatility, we maintained strong engagement with our customers
and remained dedicated to supporting their progress. Leveraging
the strengths of our connected Commercial & Institutional (C&I)
segment, we stayed focused on what mattered most to our
customers, colleagues and key stakeholders, ensuring they
received the support needed throughout a challenging
environment.
Financial Performance
We reported an attributable profit of €133 million for 2025,
compared with €159 million in 2024. This decrease was primarily
driven by a €45 million reduction in net interest income and a €33
million increase in operating expenses, partially offset by a €47
million increase in non-interest income. Tax was a net credit of
€45 million, up from €34 million in 2024, reflecting additional
recognition of deferred tax assets of €51 million in 2025,
compared with €40 million in the prior year
Total assets decreased to €28.5 billion as at 31 December 2025
compared with €30.2 billion as at 31 December 2024.
We continue to be well capitalised. Total equity as at 31
December 2025 was €2,113 million, an increase of €70 million
compared with 31 December 2024. At 31 December 2025, our
total capital ratio was 23.2% with a CET1 ratio of 18.5% and Tier
1 ratio of 21.7
%.
Corporate governance
2025 was marked with changes to the Supervisory Board
members of NWM N.V. and RBSH N.V. Mr Maarten Klessens took
over Mr Frank Dangeard’s responsibilities as Interim Chair of the
Supervisory Board, in addition to his role as Chair of the Board
Risk and Audit Committees on 25 March 2025. Subsequently, on
23 April 2025, Mr Frank Dangeard resigned from the Supervisory
Board
(1)
.
During 2025 the NWM N.V. and RBSH N.V. Supervisory Board
welcomed three new members with Mr Julio Alvaro, Ms Sylvie
Billion and Ms Carola von Schmettow, joining on 23 September,
15 October and 2 December 2025 respectively. Mr Alvaro was
also appointed Chair of the Audit Committee, succeeding Mr
Klessens.
Building a leading presence across Europe
I'm delighted with our progress as we, within the NatWest Group
Commercial & Institutional segment, continue to strategically align
our top-tier products and services to create value for our
customers in these turbulent economic times.
In the European region, commercial performance has been strong
throughout the year, especially from our Trading and Private
Financing business.
Following the decision in December 2024 that NWM N.V. will
become NatWest Group‘s primary European corporate and
institutional customer-facing entity, 2025 was focused on
delivering the measured transition of NatWest Bank Europe GmbH
(NWBE) assets to NWM N.V. Group. As a result, most colleagues
supporting customers with Structured Finance in NWBE have
transitioned to NWM N.V. on 1 January 2026.
Delivering strategic progress
Our strategic cornerstone is the development of robust, long-
lasting customer relationships. This philosophy aligns our mission
of converting possibilities into tangible progress with our goal of
mutual success, structured around three key strategic focuses.
Three core behaviours guide this, helping us achieve it: we start
with customers, we raise the bar and we own our impact.
On 1 July 2025, NatWest Group launched its new climate and
transition finance (CTF) framework, supporting both climate-
aligned and transition-enabling activities. Between July and
December 2025, we provided €4.9 billion under the CTF
framework, leading to a total blended contribution €11.8 billion
across climate and sustainable funding and financing and CTF.
Enhancing our licence to grow and operate
Being supervised by the European Central Bank (ECB) from 1
January 2024, NWM N.V. Group has undergone four ECB on-site
inspections in 2025. In November 2025, the ECB granted the
same score as 2024 to NWM N.V. Group’s overall Supervisory
Review and Evaluation Process score.
Throughout 2025, two main ratings agencies – Moody’s and S&P
- have maintained the same 2024 score for NWM N.V. whilst on
25 June 2025, Fitch Ratings upgraded NatWest Markets N.V. to
'AA-' from 'A+' and its Short-Term IDRs to 'F1+' from 'F1'
recognizing the stability of our business.
Elevating our colleagues
Our strategy centres on developing talent, fostering innovation,
and promoting cross-functional collaboration to empower and
engage our workforce, driving our growth objectives.
Our ongoing focus is on nurturing a diverse, equitable, and
inclusive workplace, supported by a highly engaged, customer-
focused team with deep financial markets expertise.
Looking towards 2026, I am optimistic that we have substantially
reinforced our ability to underpin the C&I segment. This
strengthened foundation will empower us to provide tailored
solutions to our customers across Europe, reinforcing our
commitment to excellence and customer-centric service.
Vincent Goedegebuure
Chairman and CEO, NatWest Markets N.V.
17 February 2026
(1)
The search for a permanent Chair is at an advanced stage. Further details regarding
the proposed appointment will be provided in due course.
Financial review continued
NatWest Markets N.V.
Annual Report and Accounts 2025
5
Summary consolidated income statement
2025
2024
Variance
€m
€m
€m
%
Interest receivable
331
502
(171)
(34%)
Interest payable
(256)
(382)
126
(33%)
Net interest income
75
120
(45)
(38%)
Fees and commissions receivable
242
236
6
3%
Fees and commissions payable
(28)
(29)
1
(3%)
Income from trading activities
40
21
19
90%
Other operating income
(26)
(47)
21
(45%)
Non-interest income
228
181
47
26%
Total income
303
301
2
1%
Staff costs
(94)
(84)
(10)
12%
Premises and equipment
(6)
(6)
-
-
Other administrative expenses
(108)
(85)
(23)
27%
Depreciation and amortisation
(2)
(2)
-
-
Operating expenses
(210)
(177)
(33)
19%
Profit before impairment losses/releases
93
124
(31)
(25%)
Impairment (losses)/releases
(5)
1
(6)
nm
Operating profit before tax
88
125
(37)
(30%)
Tax credit
45
34
11
32%
Profit for the year
133
159
(26)
(16%)
Attributable to:
Ordinary shareholders
117
135
(18)
(13%)
Paid-in equity holders
16
24
(8)
(33%)
133
159
(26)
(16%)
nm = not meaningful
Operating profit before tax
was €88 million compared with €125
million in 2024. The decrease was mainly due to a €45 million
decrease in net interest income and a €33 million increase in
operating expenses. This was partially offset by a €47 million
increase in non-interest income.
Profit for the year was €133 million compared with €159 million
in 2024.
Net interest
income
was €75 million compared with €120 million
in 2024,
primarily driven by changes in interest rates, as well as
shifts in the lending portfolio and funding book. Interest
receivable decreased by €171 million to €331 million (2024 -
€502 million). This reduction mainly reflected lower interest
receivable on balances held at central banks and loans to banks,
as well as on other financial assets. Interest payable decreased
by €126 million to €256 million (2024 - €382 million), primarily
due to lower interest payable on customer deposits and other
financial liabilities.
Non-interest income
increased by €47 million to €228 million
compared with €181 million in 2024. Net fees and commissions
were an income of €214 million (2024 - €207 million income).
The increase in net fees and commission was mainly due to an
increase in transfer pricing income from NWM Plc to €156 million
(2024 - €153 million) and an increase in underwriting fees to €66
million (2024 - €60 million). Guarantee fees paid to NWM Plc for
risk sharing agreements decreased by €4 million to €1 million.
Income from trading activities was €40 million, compared with
€21 million in 2024. Other operating income was a loss of €26
million, compared with a loss of €47 million in 2024. This was
mainly driven by fair value changes of structured deposits.
Operating expenses
increased by €33 million to €210 million
(2024 - €177 million). The increase was primarily driven by
higher other administrative expenses, which rose by €23 million
to €108 million, mainly reflecting increased cost recharges from
NatWest Group companies of €13 million. Staff costs increased
by €10 million to €94 million, largely due to higher non-recurring
personnel
-
related costs. Premises and equipment costs remained
stable at €6 million (2024- €6 million). Depreciation and
amortisation were unchanged at €2 million (2024 - €2 million).
Impairments
were a loss of €5 million, compared with a release
of €1 million in 2024.
Tax credit
for 2025 was €45 million, compared with a tax credit
of €34 million in 2024. This was primarily driven by additional
recognition of deferred tax assets of €51million in 2025
compared with €40 million in the prior year. Refer to Note 6 to
the consolidated financial statements for further details.
Financial review continued
NatWest Markets N.V.
Annual Report and Accounts 2025
6
Consolidated balance sheet as at 31 December 2025
2025
2024
Variance
€m
€m
€m
%
Assets
Cash and balances at central banks
7,608
6,187
1,421
23%
Trading assets
6,509
6,688
(179)
(3%)
Derivatives
8,791
11,860
(3,069)
(26%)
Settlement balances
111
866
(755)
(87%)
Loans to banks - amortised cost
613
225
388
172%
Loans to customers - amortised cost
1,422
935
487
52%
Amounts due from holding companies and fellow subsidiaries
1,293
1,203
90
7%
Other financial assets
1,959
2,111
(152)
(7%)
Other assets
175
119
56
47%
Total assets
28,481
30,194
(1,713)
(6%)
Liabilities
Bank deposits
975
597
378
63%
Customer deposits
4,968
2,999
1,969
66%
Amounts due to holding companies and fellow subsidiaries
2,111
2,558
(447)
(17%)
Settlement balances
182
685
(503)
(73%)
Trading liabilities
6,751
7,061
(310)
(4%)
Derivatives
7,331
10,510
(3,179)
(30%)
Other financial liabilities
3,679
3,368
311
9%
Subordinated liabilities
290
303
(13)
(4%)
Other liabilities
81
70
11
16%
Total liabilities
26,368
28,151
(1,783)
(6%)
Total equity
2,113
2,043
70
3%
Total liabilities and equity
28,481
30,194
(1,713)
(6%)
Total assets
were €28,481 million at 31 December 2025, a
decrease of €1,713 million, or 6%, compared with €30,194
million at 31 December 2024, mainly driven by a decrease in
derivatives to €8,791 million (31 December 2024 - €11,860
million).
This was partially offset by an increase in cash and
balances at central banks to €7,608 million (31 December 2024
- €6,187 million).
Cash and balances at central banks
increased by €1,421 million
to €7,608 million at 31 December 2025. The full balance is
placed with the Dutch Central Bank, and it is the key component
of the NWM N.V. liquid asset buffer.
Trading assets
decreased by €179 million, or 3%, to €6,509
million. The 2025 balance mainly pertains to loans subject to
reverse repurchase agreements amounting to €4,630 million
(2024 - €4,489 million) and cash collateral posted to derivative
counterparties amounting to €1,867 million (2024 - €2,079
million).
Loans to customers - amortised cost
increased by €487 million
to €1,422 million, primarily driven by the transfer of structured
finance loans from NWBE to NWM N.V. The loan portfolio
includes loans to corporates and financial institutions. The
majority has a residual maturity of more than twelve months.
Amounts due from holding companies and fellow subsidiaries
increased by €90 million to €1,293 million, mainly driven by a
increase in loans to banks of €224 million to €267 million and an
increase in settlement balances of €153 million to €165 million.
This was partially offset by a decrease in trading assets of €290
million to €821 million.
Other financial assets
decreased by €152 million to €1,959
million, mainly driven by a decrease in debt securities of €151
million.
Other assets
increased by €56 million to €175 million at 31
December 2025. This was primarily driven by additional
recognition of deferred tax assets in 2025.
Derivative assets and liabilities
amounted to €8,791 million (2024
- €11,860 million) and €7,331 million (2024 - €10,510 million),
respectively. The derivative balances primarily relate to foreign
exchange and interest rate contracts. Of these balances, €2,994
million (2024 - €4,061 million) of derivative assets and €2,218
million (2024 - €4,004 million) of derivative liabilities represent
exposures to holding companies and fellow subsidiaries.
Customer deposits
increased by €1,969 million, or 66%, to
€4,968 million. The growth in the customer deposit portfolio was
primarily driven by higher deposits from non
-
bank financial
institutions.
Amounts due to holding companies and fellow subsidiaries
decreased by €447 million to €2,111 million, primarily driven by a
reduction in bank deposits of €325 million to €685 million and a
decrease in settlement balances of €72 million to €75 million.
Trading liabilities
decreased by €310 million, or 4%, to €6,751
million. The 2025 balance mainly pertains to deposits subject to
repurchase agreements amounting to €4,424 million (2024 -
€4,272 million) and cash collateral received from derivative
counterparties amounting to €2,325 million (2024 - €2,787
million).
Other financial liabilities
increased by €311 million to €3,679
million, driven by an increase in debt securities in issue to €3,009
million (2024 - €2,897 million) and an increase in customer
deposits measured at fair value through profit or loss to €670
million (2024 - €471 million).
Total equity
increased by €70 million, or 3%, to €2,113 million,
mainly driven by the profit for the period of €133 million. This
was partially offset by cash flow hedging movements of €22
million, a reduction in own credit adjustments of €21 million,
paid-in equity dividends of €16 million and currency translation
adjustments of €4 million.
Top and emerging risks
NatWest Markets N.V.
Annual Report and Accounts 2025
7
Top and emerging risks are future scenarios that could have a significantly negative impact on our ability to operate or deliver our
strategy and are managed through the EWRMF toolkit. They usually combine elements of several principal risks and require a
coordinated management response. Top risks could occur or require management action within two years, while emerging risks are
evolving and/or could occur over a longer time horizon but have the potential to become a top risk. In 2025, the Executive Risk
Committee, the Board Risk Committee and the Board received regular reporting on top and emerging risks. The top and emerging risks
scenarios that follow are shown in alphabetical order.
(1)
All references to NatWest Group in this table includes NWM N.V. Group.
Top risk scenarios in
focus in 2025
Description
Risk management actions
Artificial intelligence
Innovations in artificial intelligence (AI), including generative AI,
may rapidly transform and disrupt customer interactions, the
industry and the economy. NWM N.V. Group’s ability to continue
to deploy AI solutions and integrate AI in systems and controls will
become increasingly important to retaining and growing business.
There can be no certainty that NatWest Group’s innovation
strategy will be successful, and competitors may be more
successful in implementing AI technologies, in turn, affecting
industry competitive dynamics. Developments in AI may also result
in increased model risk and rising levels of fraud.
NWM N.V. Group closely monitors developments in
disruptive technologies, including AI. Strategy is
developed as appropriate to leverage AI across NWM
N.V. Group with a focus on helping improve customer
journeys, personalisation, colleague effectiveness and
improved risk and capital management. Using AI safely
and ethically is a key area of focus, alongside
compliance with evolving AI regulation. This includes
developing a robust set of controls for the use of AI
models and tools across NWM N.V. Group. AI risk
management is being developed proactively to reflect
technological and systems advances.
Climate ambitions
NatWest Group’s
(1)
strategy in relation to climate – including
ambitions, targets, and implementing a transition plan – carries
significant financial and non-financial risks. Achieving these goals
depends on timely and appropriate government policy, technology
developments, and on suppliers, customers and society supporting
the transition.
NatWest Group retains its ambition to at least halve
the climate impact of its financing activity by 2030,
against a 2019 baseline, having achieved a 39%
reduction between 2019 and 2024, primarily through
strategic decisions and methodology and data
enhancements.
Cyberattack
There is a constantly evolving threat from cyberattacks which are
increasing in terms of frequency, sophistication, impact and
severity. This includes hostile attempts to gain access to and
exploit potential vulnerabilities of IT systems including via malware.
Any failure in NWM N.V. Group’s cybersecurity policies,
procedures or controls, may result in significant financial losses,
major business disruption, inability to deliver customer services,
loss of data and associated reputational damage.
NWM N.V. Group continues to invest in additional
capability to defend against threats including
developing and evolving cybersecurity policies,
procedures and controls that are designed to minimise
the possibility of, and the potential effect of such
attacks. The focus is to manage the impact of the
attacks and maintain services for NWM N.V. Group’s
customers. This includes proving cyber resilience
capabilities via stress testing of NWM N.V. Group’s
important business services. In addition, NWM N.V.
Group utilises threat intelligence to inform its approach
to identifying and responding to potential cyber risks.
Digital currency
NWM N.V. Group operates in markets which would be exposed to
any developments in digital currency and/or assets, including
tokenised deposits and stablecoins. The introduction of new digital
currencies could result in deposit outflows, higher funding costs,
and/or other implications for banks including NWM N.V. Group.
NatWest Group is focused on delivery of its digital
asset strategy which includes participation in tokenised
deposit pilots, and close engagement with regulators
on future regulatory regimes for digital assets and
monitoring of industry developments. This approach
ensures alignment with emerging market practices
and regulatory expectations.
NatWest Group maintains an Executive Steering Group
on digital assets which oversees developments and
engagement on digital currencies. It also coordinates
engagement with the regulators on digital currency
developments and financial market infrastructures
such as proposals on regulatory treatment of
stablecoins.
Economic and interest rate
volatility
Economic conditions could deteriorate, depending on factors
including weak economic activity, fiscal policies, volatility in interest
rates, liquidity pressures, sharp falls in asset prices, escalating
geopolitical tensions and concerns regarding sovereign debt or
sovereign credit ratings. Any of these may have a materially
adverse effect on NWM N.V. Group’s future financial prospects.
A range of complementary approaches is used to
mitigate the risks, such as targeted scenario analysis,
stress tests, targeted customer reviews and reviews of
risk appetite. Stress tests in 2025 included completion
of regulatory stress tests as well as a range of internal
scenarios.
Evolving regulation
NWM N.V. Group’s businesses are subject to substantial regulation
and oversight, both of which are constantly evolving and may
have an adverse impact on NWM N.V. Group. Areas of ongoing
regulatory focus include Basel 3.1 standards implementation,
including the resulting effect on RWAs and models, as well as the
effective management of financial crime.
NWM N.V. Group constantly monitors regulatory
change. It engages closely with regulators in the
shaping of regulation that materially impacts NWM
N.V. Group, responding when necessary, either
bilaterally or in partnership with one of the affiliated
industry bodies. NWM N.V. Group implements new
responses to regulatory requirements where applicable
and uses frequent engagement meetings with
regulators to discuss key priorities.
Increased competition
Competitive pressures could intensify, impeding NWM N.V. Group’s
ability to grow or retain market share, impacting revenues and
profitability. Drivers of competition mainly relate to developments
in technology, evolving incumbents, challengers, new entrants to
the market, shifts in customer behaviour and changes in
regulation. For example, increased competition from technology
conglomerates, who may have competitive advantages in scale,
technology and customer engagement (including brand
recognition).
NWM N.V. Group closely monitors the competitive
environment and adapts its strategy as appropriate.
This includes using scenario analysis and assessing
how mega-trends will impact industry competitive
dynamics. Strategic responses are focused on the
delivery of innovative and compelling propositions for
customers and effectively leveraging acquisitions and
partnerships.
Top and emerging risks continued
NatWest Markets N.V.
Annual Report and Accounts 2025
8
Operational risk scenarios
Operational risks are inherent in NWM N.V. Group’s businesses
and a broad range of scenarios are considered. NWM N.V. Group
could be adversely impacted by scenarios including a failure to
access current, complete, and accurate data, or disruption to
services if a third-party service provider experienced any
interruptions. These scenarios could result in business and
customer interruption and related reputational damage, significant
compensation costs, regulatory sanctions and/or a breach of
applicable regulations.
NWM N.V. Group maintains a robust approach to
operational resilience through comprehensive, Group-
wide processes and regular scenario tests to ensure
effective management of interconnected operational
risks.
NWM N.V. Group devotes significant resources to
third-party risk management. Focus areas include
identifying critical-service suppliers, developing robust
exit and contingency plans in the event of supply chain
disruption, and ensuring appropriate monitoring and
oversight of third-party performance.
Effective and ethical use of data is critical to NWM N.V.
Group’s goals, with continued focus on delivering our
long-term data strategy alongside enhancing control
and policy frameworks governing data usage.
Emerging risk scenarios
in focus in 2025
Description
Risk management action
Geopolitical risk
NWM N.V. Group is exposed to risks arising from geopolitical
events or political developments. Geopolitical tensions remain
elevated and a range of potential scenarios and impacts are
considered. This includes the potential impact of armed conflict,
global trade and supply chain disruption, volatility in commodity
prices, protectionist policies or trade barriers and state-sponsored
cyberattacks.
NWM N.V. Group closely monitors the geopolitical risk
outlook and undertakes regular scenario analysis to
understand the potential impacts and takes mitigating
actions as required. This includes second and third-
order analysis of impacts, for example, through
customers’ supply chain disruption or disruption to
third-party providers.
Market-based finance (MBF)
NatWest Group is exposed to vulnerabilities within shadow banking
or MBF, given the interlinkages between banks and MBF. This
includes the potential for stress events or shocks to financial
markets.
NatWest Group closely monitors exposure to MBF. An
internal framework for the identification, management,
control and mitigation of the risks associated with
exposure to MBF is maintained. This includes effective
reporting and governance in respect of such exposure.
Physical climate risk
Intensifying physical climate-related risks, including climate events,
materially increasing in frequency and/or severity, results in direct
impacts on property, infrastructure, supply chains, geopolitics and
economic activity. This could lead to significant credit, operational
(for example, business continuity), market, liquidity, pension risks
and/or non-financial risks and, if those risks are not mitigated,
losses.
NatWest Group leverages scenario analysis to explore
the potential impact of physical climate risks and
ensure appropriate mitigation. NatWest Group includes
a scenario exploring quantifiable impacts of chronic
physical climate effects, such as a drag on labour and
land productivity, and acute physical shocks such as
droughts, heatwaves, wildfires and floods within its
suite of stress testing scenarios. In addition, a
qualitative scenario is used to explore cascading and
complex risks, including potential earth system tipping
points, that are currently challenging for quantitative
scenarios and models to capture.
Sustainability reporting approach
Following recent regulatory changes under the EU Omnibus simplification process, NWM N.V. Group does not expect to fall within the
scope of mandatory entity-level Corporate Sustainability Reporting Directive disclosures in the coming years. Given this development,
NWM N.V. Group has taken the decision to integrate its sustainability-related information into existing sections of its Annual Report and
Accounts, such as climate and nature risk, credit risk, financial review and corporate governance. This integrated approach ensures
that our entity-level disclosures remain proportionate, guided by materiality and transparency principles, and complementary to
sustainability disclosures made by our ultimate parent NatWest Group.
Risk and capital management
NatWest Markets N.V.
Annual Report and Accounts 2025
9
Presentation of information
Where marked as audited in the section header, certain
information in the Risk and capital management section (pages 9
to 48) is within the scope of the Independent auditor’s report.
Risk management framework
Introduction
NWM N.V. Group operates under NatWest Group’s enterprise-
wide risk management framework (EWRMF), which is centred
on the embedding of a strong risk culture. The framework
ensures the governance, capabilities and methods are in place
to facilitate risk management and decision-making across the
organisation.
The framework ensures that NWM N.V. Group’s principal risks –
which are detailed in this section – are appropriately controlled
and managed. It sets out the standards and objectives for risk
management as well as defining the division of roles and
responsibilities.
This seeks to ensure a consistent approach to risk management
across NWM N.V. Group. It aligns risk management with NWM
N.V. Group’s overall strategic priorities of growth through better
understanding of customers, leveraging simplification and better
management of resources.
The framework, which is designed and maintained by NatWest
Group’s independent Risk function, is owned by the NatWest
Group Chief Risk Officer. It is reviewed and approved annually
by the NatWest Group Board. The framework incorporates risk
governance, NatWest Group’s three lines of defence operating
model and the Risk function’s mandate. NWM N.V. Group Board
reviews and approves the adoption of the framework.
Risk appetite, supported by a robust set of principles, policies
and practices, defines the levels of tolerance for a variety of
risks and provides a structured approach to risk-taking within
agreed boundaries.
While all NWM N.V. Group colleagues are responsible for
managing risk, the Risk function provides oversight and
monitoring of risk management activities, including the
implementation of the framework and adherence to its
supporting policies, standards and operational procedures. The
Chief Risk Officer plays an integral role in providing the Board
with advice on NWM N.V. Group’s risk profile, the performance
of its controls and in providing challenge where a proposed
business strategy may exceed risk tolerance.
In addition, there is a centralised process in NWM Group to
identify and manage top and emerging risks, which are those
that could have a significant negative impact on its ability to
meet its strategic objectives. Both top and emerging risks may
incorporate aspects of – or correlate to – a number of principal
risks. NWM N.V Group identifies and manages specific legal
entity threats, as part of NWM Group’s process, and are
monitored by the NWM N.V. Group Board.
Page
Presentation of information
9
Risk management framework
Introduction
9
Culture
10
Governance
11
Risk appetite
14
Identification and measurement
15
Mitigation
15
Monitoring
15
Traded market risk
16
Non-traded market risk
18
Capital, liquidity and funding risk
Definition
20
Capital management
21
Liquidity and funding management
21
Credit risk
Definition
23
Sources of risk
23
Key developments in 2025
23
Governance
23
Risk appetite
23
Identification and measurement
23
Assessment and monitoring
23
Mitigation
23
Problem debt management and forbearance
23
IFRS 9 models
24
Economic drivers
24
Impairment, provisioning and write-offs
28
Measurement uncertainty and ECL sensitivity
28
Trading activities
30
Banking activities
31
Climate and nature risk
38
Operational risk
43
Compliance and conduct risk
45
Financial crime risk
46
Model risk
47
Reputational risk
48
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
10
Risk management framework continued
Culture
The approach to risk culture, under the banner of intelligent risk-
taking, ensures a focus on robust risk management behaviours
and practices. This underpins the strategy across all three lines
of defence, enables NWM N.V. Group to support better
customer outcomes, develop a stronger and more sustainable
business and deliver an improved cost base.
NWM N.V. Group expects leaders to act as role models for
strong risk behaviours and practices building clarity, developing
capability and motivating employees to reach the required
standards set out in the intelligent risk-taking approach.
Colleagues are expected to:
•
Consistently role-model the behaviours in Our Code, based
on strong ethical standards.
•
Empower others to take risks aligned to NWM N.V. Group’s
strategy, explore issues from a fresh perspective, and tackle
challenges in new and better ways across organisational
boundaries.
•
Manage risk in line with appropriate risk appetite.
•
Ensure each decision made keeps NWM N.V. Group,
colleagues, customers, communities and shareholders safe
and secure.
•
Understand their role in managing risk, remaining clear and
capable, grounded in knowledge of regulatory obligations.
•
Consider risk in all actions and decisions.
•
Escalate risks and issues early; taking action to mitigate risks
and learning from mistakes and near-misses, reporting and
communicating these transparently.
•
Challenge others’ attitudes, ideas and actions.
Target intelligent risk-taking outcomes are embedded in
NatWest Group’s behaviours framework, forming a core
foundation of the risk culture and guiding recruitment and
selection across the organisation.
Training
Enabling employees to have the capabilities and confidence to
manage risk is core to NatWest Group’s learning strategy.
NatWest Group offers a wide range of learning, both technical
and behavioural, across the risk disciplines. This training may be
mandatory, role-specific or for personal development.
Mandatory learning for all staff is focused on keeping employees,
customers and NatWest Group safe. This is easily accessed
online and is assigned to each person according to their role and
business area. The system allows monitoring at all levels to
ensure completion.
Our Code
NatWest Group’s conduct guidance, Our Code, provides
direction on expected behaviour and sets out the standards of
conduct that support the values. The code explains the effect of
decisions that are taken and describes the principles that must
be followed.
These principles cover conduct-related issues as well as wider
business activities. They focus on desired outcomes, with
practical guidelines to align the values with commercial strategy
and actions. The embedding of these principles facilitates sound
decision-making and a clear focus on good customer outcomes.
Any employee falling short of the expected standards will be
subject to internal disciplinary policies and procedures and
where appropriate, the relevant authorities will be notified.
Variable pay for eligible colleagues will reflect overall
performance, including the impact of any conduct issues.
Adjustments may be made through the performance
management process, or where necessary, via the
accountability review process for the individuals concerned. The
NatWest Group remuneration policy ensures that the
remuneration arrangements for all employees reflect the
principles and standards prescribed by the PRA, the ECB, the
FCA, DNB and the AFM.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
11
Risk management framework continued
Governance
Risk management structure
While NWM N.V. Group is part of NatWest Group – and operates within NatWest Group’s risk framework – the NWM N.V. Group
Supervisory Board is responsible for approving and overseeing the implementation of NWM N.V. Group’s business strategy (within the
parameters set by the NatWest Group Board). The NWM N.V. Group Board Risk Committee provides oversight and advice on risk
related matters. Operational policies and compliance activities may be adapted in order to comply with local legal or regulatory
requirements.
Service level agreements are in place between NWM N.V. Group and NatWest Group entities (primarily NWM Plc) to accommodate
integrated risk management oversight.
The diagram shows NWM N.V. Group’s risk management structure in 2025.
NatWest Group
Chief Executive
Officer
NWM Plc Chief
Executive
Officer
NatWest Group
Chief Risk
Officer
NWM N.V.
Group Chief
Executive
Officer
NWM Plc Chief
Risk Officer
NWM N.V.
Group Chief
Risk Officer
Head of
Model Risk
Head of
Operational
Risk
Head of
Financial
Crime
Head of
Compliance
& Conduct
Head of
Market,
Liquidity &
Funding Risk
Head of
Credit Risk
Climate Risk
(1)
NWM N.V. Group is a wholly owned (indirect) subsidiary of NatWest Markets Group Plc.
(2)
The NWM N.V. Group Chief Risk Officer has a functional reporting line to the NWM Plc Chief Risk Officer.
(3)
The NWM N.V. Group Risk function is independent and provides oversight of risk management activities to ensure risks are adequately monitored and controlled.
(4)
The NWH Risk function provides risk management services across NatWest Group, including – where agreed – to the NWM N.V. Group Chief Risk Officer. These services are managed,
as appropriate, through service level agreements.
(5)
Risk management in NWM N.V. Group focuses on all material risks including credit, market, liquidity, operational, regulatory, financial crime, climate, model and conduct risk and business
activities which are managed through the Management Risk Committee. The day-to-day management of capital, liquidity, funding and non-traded market risk is the overall responsibility
of the Managing Board and further delegated to the Asset & Liability Management Committee.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
12
Risk management framework continued
The following table details NWM N.V. Group’s main boards and committees together with an overview of their responsibilities.
Board/Committee
Responsibilities
Supervisory Board
Membership:
Consisted of six members as at 31 December 2025.
The Supervisory Board is responsible for supervising NWM N.V. Group’s
management, its general affairs, and the business connected with it, as well
as advising the Managing Board. The Supervisory Board is responsible for
the review of all matters relative to accounting policies, internal control,
financial reporting functions, internal audit, external audit, risk management,
regulatory compliance and the product approval process. There are
separate Risk and Audit Committees. Their memberships are composed of
members of the Supervisory Board.
Board Risk Committee (BRC)
Membership:
Current membership consists of an independent member
as Chair and three further independent Supervisory
Board members as formal members.
The BRC provides oversight and advice on current and future risk
exposures, the effectiveness of the risk management framework, future risk
strategy and (with the Audit Committee) internal controls required to
manage risk.
Board Audit Committee
Membership:
Current membership consists of an independent member
as Chair and three further independent Supervisory
Board members as formal members. The members must
have thorough knowledge of the financial aspects of risk
management or the necessary experience to permit a
thorough assessment of risks as well as thorough
knowledge of financial reporting, internal control systems,
audits and accounting (relating to financial institutions or
other large companies).
The Board Audit Committee:
•
Reviews and monitors all matters relating to accounting policies, internal
control, financial reporting functions, Internal Audit, external auditor risk
assessment, regulatory compliance and the product approval process.
•
Establishes a procedure for the selection of an external auditor.
•
Assesses the monitoring of the external auditor and the statutory audit
of the annual accounts.
Performance & Remuneration Committee
Membership:
Current membership consists of an independent member
as Chair and two further independent Supervisory Board
members as formal members.
The Performance & Remuneration Committee is responsible for providing
oversight to, and supporting the remuneration decision making of, the
Supervisory Board, including the establishment and implementation of the
NWM N.V. Remuneration Policy.
Nomination Committee
Membership:
Current membership consists of an independent member
as Chair and all of Supervisory Board as formal
members.
The Nomination Committee has a key role in assessing the suitability,
diversity and composition of the Managing Board and Supervisory Board.
Managing Board
Membership:
Consists of four members at 31 December 2025: the
NWM N.V. Group Chairman and Chief Executive Officer
(CEO), the NWM N.V. Group Chief Financial Officer (CFO)
the NWM N.V. Group Chief Risk Officer (CRO) and the
NWM N.V. Group Chief Operating Officer (COO).
The Managing Board reports to the Supervisory Board. It is the principal
decision-making corporate body for NWM N.V. Group and is responsible for
the day-to-day activities of NWM N.V. Group. The Managing Board is,
among others, responsible for setting policy framework, operating structure
and yearly plan (including objectives and budgets). In addition to their overall
corporate responsibilities, the members of the Managing Board manage one
or more units, for which they have primary responsibility.
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NatWest Markets N.V.
Annual Report and Accounts 2025
13
Risk management framework continued
Board/Committee
Responsibilities
Management Risk Committee (MRC)
Membership:
Chaired by the NWM N.V. Group CRO. Members include
the NWM N.V. Group CEO, the NWM N.V. Group CFO,
the NWM N.V. Group COO, the NWM N.V. Group
General Counsel, the NWM N.V. Group Treasurer, the
NWM N.V. Group Head of Trading, the NWM N.V. Group
Head of Corporate Coverage, Debt & Financing
Solutions, NWM N.V. Group Head of Customer Sales,
NWM N.V. Head of Private Financing and NWM N.V.
Head of Compliance & Conduct.
The responsibilities of the MRC include:
•
Advising on and recommending the Risk Appetite Statement via the
BRC to the Supervisory Board (which approves), overseeing embedding
and responses to breaches, and keeping the Managing Board informed
as required.
•
Providing input to NWM N.V. Group’s risk appetite setting process in the
context of NWM N.V. Group’s overall risk appetite.
•
Overseeing the risk framework within NWM N.V. Group and reporting
directly to the BRC on the performance of the framework and on issues
arising from it, and reporting to the managing board as required.
•
Monitoring the actual risk profile of NWM N.V. Group, ensuring that this
remains within the boundaries of the agreed risk appetite and escalating
excesses to the BRC. Prior to escalation, the MRC can ask the
appropriate owner who normally monitors and controls the risk item, to
address any excess.
•
The remit of the Committee also includes monitoring of capital, liquidity,
credit, market, conduct, financial crime, climate, operational, model, and
regulatory risks within NWM N.V. Group.
•
Changes to the Terms of Reference of the MRC must be approved by
the Managing Board.
Executive Disclosure Committee (EDC)
Membership:
Chaired by the NWM N.V. Group CFO. Members include
the NWM N.V. Group CEO, the NWM N.V. Group CRO,
the NWM N.V. Group Treasurer, the NWM N.V. Group
General Counsel, Head of NatWest Group Accounting
Policy and NWM Financial Controller.
The responsibilities of the EDC include:
•
Monitoring, evaluation and enhancing disclosure controls and
procedures; and internal controls over financial reporting.
•
Overseeing, evaluating, and approving all significant disclosures made
by NWM N.V. Group including:
•
The Annual Report and Accounts and corresponding interim disclosures.
•
Public filings to be made in connection with the announcement of
financial results, excluding filings with regulators.
Furthermore, the responsibilities of the EDC include overseeing, evaluating
and reviewing accounting issues and developments and recommendations
on key accounting judgments, including risk and capital disclosures, prior to
presentation to the NWM N.V. Group Managing and Supervisory Board. The
EDC will make recommendations to the NWM N.V. Group Managing and
Supervisory Board in relation to its review of these items.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
14
Risk management framework continued
Three lines of defence
NatWest Group uses the industry-standard three lines of
defence model to articulate accountabilities and responsibilities
for managing risk. This supports the embedding of effective risk
management throughout the organisation.
First line of defence
The first line of defence incorporates most roles in NatWest
Group, including those in the customer-facing
businesses
,
Technology and Services as well as support functions such as
People, Legal and Finance.
The first line of defence is empowered to take risks within the
constraints of the risk management framework, policies, risk
appetite statements set by NatWest Group and measures set by
the NWM N.V. Group Managing and Supervisory Boards.
The first line of defence is responsible for managing its direct
risks, and with the support of specialist functions, it is also
responsible for managing its consequential risks, by identifying,
assessing, mitigating, monitoring and reporting risks.
Second line of defence
The second line of defence comprises the Risk function and is
independent of the first line.
The second line of defence is empowered to design and maintain
the risk management framework and its components. It
undertakes proactive risk oversight and continuous monitoring
activities to confirm that NWM N.V. Group engages in
permissible and sustainable risk-taking activities.
The second line of defence advises on, monitors, challenges,
approves and escalates where required and reports on the risk-
taking activities of the first line of defence, ensuring that these
are within the constraints of the risk management framework,
policies, risk appetite statements set by NatWest Group and
measures set by the NWM N.V. Group Managing and
Supervisory Boards.
Third line of defence
The third line of defence is the Internal Audit function and is
independent of the first and second lines.
The third line of defence is responsible for providing independent
assurance to the NatWest Group Board, its subsidiary legal
entity boards and executive management on the overall design
and operating effectiveness of the risk management framework
and its components. This includes the adequacy and
effectiveness of key internal controls, governance and the risk
management in place to monitor, manage and mitigate the
principal risks to NatWest Group and its subsidiary companies.
The third line of defence executes its duties freely and
objectively in accordance with the Chartered Institute of Internal
Auditors’ Code of Ethics and International Standards on
independence and objectivity.
Risk appetite
Risk appetite defines the type and aggregate level of risk NWM
N.V. Group is willing to accept in pursuit of its strategic
objectives and business plans. Risk appetite supports sound risk-
taking, the promotion of robust risk practices and risk
behaviours, and is calibrated annually.
For certain principal risks, risk capacity defines the maximum
level of risk NWM N.V. Group can assume before breaching
constraints determined by regulatory capital and liquidity
requirements, the operational environment, and from a conduct
perspective.
Establishing risk capacity helps determine where risk appetite
should be set, ensuring there is a buffer between internal risk
appetite and NWM N.V. Group’s ultimate capacity to absorb
losses.
Risk appetite framework
The risk appetite framework supports effective risk management
by promoting sound risk-taking through a structured approach,
within agreed boundaries. It also ensures emerging risks and
risk-taking activities that might be out of appetite are identified,
assessed, escalated and addressed in a timely manner.
To facilitate this, a detailed review of the framework is carried
out annually which is approved by the Board. The review
includes:
•
Assessing the adequacy of the framework compared to
internal and external expectations.
•
Ensuring the framework remains effective and acts as a
strong control environment for risk appetite.
•
Assessing the level of embedding of risk appetite across the
organisation.
The NWM N.V. Group Supervisory Board reviews and approves
the risk appetite framework.
Establishing risk appetite
In line with the risk appetite framework, risk appetite is
maintained across NWM N.V. Group through risk appetite
statements. These are in place for all principal risks and describe
the extent and type of activities that can be undertaken.
The financial and non-financial risks that NWM N.V. Group faces
are detailed in the NatWest Group risk directory. This provides a
common risk language to ensure consistent terminology is used
across NWM N.V. Group. The NatWest Group risk directory is
subject to annual review to ensure it continues to fully reflect the
risks that NWM N.V. Group faces.
Risk appetite statements consist of qualitative statements of
appetite supported by risk limits and triggers that operate as a
defence against excessive risk-taking. Risk measures and their
associated limits are an integral part of the risk appetite
approach and a key part of embedding risk appetite in day-to-
day risk management decisions. A clear tolerance for each
principal risk is set in alignment with business activities.
NWM N.V. Group operates within risk appetite set at NatWest
Group and NWM Plc level unless specific entity level
considerations need to prevail, for example, specific capital
structure considerations.
In addition to operating within NatWest Group and NWM Plc risk
appetite, NWM N.V. Group sets additional risk appetite limits for
its own strategic and most material risks where necessary.
NWM N.V. Group’s risk profile is continually monitored and
frequently reviewed and management focus is concentrated on
all strategic risks, material risks and emerging risks. Risk profile
relative to risk appetite is reported regularly to NWM N.V. Group
Board and senior management.
Risk appetite is approved at least annually by the Management
Risk Committee, the Managing Board and the Supervisory Board
to ensure it remains appropriate and aligned to strategy.
Risk controls and their associated limits are an integral part of
the risk appetite approach and a key part of embedding risk
appetite in day-to-day risk management decisions. A clear
tolerance for material risk types is set in alignment with business
activities.
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NatWest Markets N.V.
Annual Report and Accounts 2025
15
Risk management framework continued
NatWest Group’s key risk policies define at a high level the
qualitative expectations, guidance and standards that stipulate
the nature and extent of permissible risk taking. They form part
of the qualitative expression of risk appetite and are consistently
applied across NatWest Group and its subsidiaries. Key risk
policies are reviewed and approved by the BRC at least
annually.
Identification and measurement
Identification and measurement within the risk management
process comprises:
•
Regular assessment of the overall risk profile, incorporating
market developments and trends, as well as external and
internal factors.
•
Monitoring of the risks associated with lending and credit
exposures.
•
Assessment of trading and non-trading portfolios.
•
Review of potential risks in new business activities and
processes.
•
Analysis of potential risks in any complex and unusual
business transactions.
Mitigation
Mitigation is a critical aspect of ensuring that risk profile remains
within risk appetite. Risk mitigation strategies are discussed and
agreed within NWM N.V. Group.
When evaluating possible strategies, costs and benefits, residual
risks (risks that are retained) and secondary risks (those that
arise from risk mitigation actions themselves) are also
considered. Monitoring and review processes are in place to
evaluate results. Early identification, and effective management
of changes in legislation and regulation are critical to the
successful mitigation of principal risks. The effects of all changes
are managed to ensure the timely achievement of compliance.
Those changes assessed as having a high or medium-high
impact are managed more closely. Action is taken to mitigate
potential risks as and when required. Further in-depth analysis,
including the stress testing of exposures, is also carried out
.
NWM N.V. Group’s control framework is a vital system ensuring
effective risk management, compliance, and operational
efficiency. Central to this framework is the implementation of
various control types, including preventive, detective, and
directive controls, which address diverse risks.
Control recording is essential, involving detailed documentation
of control activities to evaluate their adequacy and effectiveness.
This serves as valuable evidence during audits and regulatory
reviews.
The risk and control self-assessment (RCSA) process enhances
the framework by enabling teams to identify potential risks and
assess the adequacy of controls.
Regular independent adequacy and effectiveness testing of
controls within the first line of defence and internal audits
conducted by Internal Audit ensure controls function as
intended. Continuous monitoring and reporting provide real-time
insights into control effectiveness, fostering accountability and
responsiveness to evolving risks. By emphasising control
recording, RCSA, and testing, NatWest Group can maintain a
resilient control environment that supports operational integrity
and regulatory compliance.
Monitoring
The primary tool used to provide regular monitoring of the risk
and control environment across NatWest Group is the risk and
control performance assessment (RCPA). Each business area
self-assesses using a set of consistent indicators and providing
qualitative context to arrive at an RCPA outcome of met,
partially met or not met. The assessment is completed annually
and the indicators are regularly monitored. The indicators
support an understanding of: the strength of the control
environment to manage risk exposure within appetite; adequacy
and effectiveness of the day-to-day management of risk and
control; adherence with applicable components of the EWRMF;
and a culture of intelligent risk-taking.
Emerging risks that could affect future results and performance
are also closely monitored.
Targeted risk processes and controls are subject to independent
testing and monitoring.
This activity is carried out to confirm to both internal and
external stakeholders – including the Board, senior
management, Internal Audit and NWM N.V. Group’s regulators –
that such processes and controls are being correctly
implemented and operate adequately and effectively.
Testing and monitoring activity focuses on processes and
controls relating to credit risk, market risk, financial crime risk,
operational risk, and compliance and conduct risk. However, a
range of controls and processes relating to other risk types is
also subject to testing and monitoring activity as deemed
appropriate within the context of a robust control environment.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
16
Definition (audited)
Traded market risk is the risk of losses in trading book positions
from fluctuations in market variables, such as interest rates,
credit spreads, foreign exchange rates, equity prices, implied
volatilities and asset correlations.
Sources of risk
(audited)
NWM N.V. Group is exposed to traded market risk through
trading activities that it enters into where such risk arises from
market-making activity and by facilitating customer-facing
business that cannot be immediately offset with other customers
or market participants. From a market risk perspective, activities
are focused on rates, capital markets, currencies and repos.
NWM N.V. Group undertakes transactions in financial
instruments including debt securities, as well as securities
financing and derivatives. The key categories of traded market
risk are interest rate risk, credit spread risk and foreign currency
price risk.
Trading activities may also give rise to counterparty credit risk.
Key developments in 2025
•
The year was marked by decreases in key interest rates
across key central banks: the European Central Bank main
refinancing operations rate reached 2.15% in December
2025 (December 2024 – 3.15%).
•
The year was marked by periods of increased market
volatility reflecting US tariffs, UK political developments,
easing inflationary concerns, the ongoing Russia-Ukraine
conflict and geopolitical tensions in the Middle East.
•
The eurozone year-on-year inflation rate decreased slightly
towards the end of the year, approaching the targeted 2%.
It had reached 1.9% in December 2025 (December 2024 –
2.4%).
•
The eurozone interest rate market was significantly less
volatile in the second half of 2025 than in the first half of the
year.
•
The financial markets exhibited flight-to-safety behaviour,
with gold reaching an all-time high of US$4,356 per ounce.
•
The US dollar weakened against the euro from 1.03 to 1.18
towards the end of the year.
•
The revised CRR3 capital requirements took effect on 1
January 2025, including a new standardised approach for
CVA (SA-CVA). The market risk rules are due to be
implemented on 1 January 2027, for which the European
Commission has consulted on further targeted
amendments.
Governance for traded market risk is in line with the approach
Risk appetite
Risk appetite for traded market risk is in line with the approach
outlined in the Risk management framework section.
Quantitative appetite for traded market risk is expressed in
terms of exposure limits. The limits at NWM N.V. Group level
comprise value-at-risk (VaR) and stressed value-at-risk (SVaR).
More details on these are provided on the following pages.
Monitoring and mitigation
Traded market risk is identified and assessed by gathering,
analysing, monitoring and reporting market risk information at
desk, business and NWM N.V. Group-wide levels. Industry
expertise, continued system developments and techniques such
as stress testing are also used to enhance the effectiveness of
the identification and assessment of all material market risks.
Traded market risk exposures are monitored against limits and
analysed and signed off daily by the Market Risk function. A daily
report summarising the position of exposures against limits at
desk, business and NWM N.V. Group levels is provided to the
trading desks. Limit reporting is supplemented with regulatory
capital and stress testing information as well as ad-hoc
reporting.
A risk review of trading businesses is undertaken weekly with
senior risk and front office staff. This includes a review of profit
and loss drivers, notable position concentrations and other
positions of concern.
Business profit and loss performance is monitored automatically
through loss triggers which, if breached, require a remedial
action plan to be agreed between NWM N.V. Group’s Market
Risk function and the business. The loss triggers are set using
both a fall-from-peak approach and an absolute loss level.
NWM N.V. Group mitigates market risk among others by
hedging transactions with NWM Group.
Measurement
NWM Group uses a comprehensive set of methodologies and
techniques to measure traded market risk. At NWM N.V. Group
level, these chiefly comprise VaR and SVaR. In addition, stress
testing is used to identify any vulnerabilities and potential losses
in excess of VaR and SVaR. The incremental risk charge is not
material at NWM N.V. Group level.
Value-at-risk
VaR is a statistical estimate of the potential change in the
market value of a portfolio (and, thus, the impact on the income
statement) over a specified time horizon at a given confidence
level.
For internal risk management purposes, VaR assumes a time
horizon of one trading day and a confidence level of 99%.
NWM N.V. Group’s internal VaR model is based on a historical
simulation, utilising market data from the previous 500 days on
an equally weighted basis.
The model also captures the potential impact of interest rate
risk, credit spread risk and foreign currency price risk.
The performance and adequacy of the VaR model are tested
regularly through the following processes:
•
Back-testing
– Internal and regulatory back-testing is
conducted on a daily basis. VaR model back-testing counts
the number of days when a loss exceeds the corresponding
daily VaR estimate, measured at a 99% confidence level.
•
Ongoing model validation
– VaR model performance is
assessed both regularly, and on an ad-hoc basis, if market
conditions or portfolio profile change significantly.
•
Model Risk Management review
– As part of the model
lifecycle, all risk models (including the VaR model) are
independently reviewed to ensure the model is still fit for
purpose given current market conditions and portfolio
profile. For further detail on the independent model
validation carried out by Model Risk Management, refer to
page 47. More information relating to pricing and market
risk models is presented in the NatWest Group 2025 Pillar 3
Report.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
17
Traded market risk
continued
The table below analyses the internal VaR for NWM N.V. Group’s trading portfolios segregated by type of market risk exposure.
2025
2024
Average
Maximum
Minimum
Period end
Average
Maximum
Minimum
Period end
€m
€m
€m
€m
€m
€m
€m
€m
Interest rate
0.3
0.8
0.2
0.3
0.8
2.2
0.3
0.6
Credit spread
0.3
0.4
0.2
0.2
0.4
0.5
0.3
0.3
Currency
-
1.0
-
-
0.1
0.7
-
0.1
Diversification
(1)
(0.2)
(0.2)
(0.4)
-
(0.4)
Total
0.4
1.2
-
0.3
0.9
2.1
0.1
0.6
(1)
NWM N.V. Group benefits from diversification, which reflects the risk reduction achieved by allocating investments across various financial instrument types, industry counterparties,
currencies and regions. The extent of the diversification benefit depends on the correlation between the assets and risk factors in the portfolio at a particular time.
•
NWM N.V. Group maintained open risk at a moderate level and traded VaR remained within set appetite during 2025 despite the
market volatility.
•
Overall, average one-day VaR decreased year-on-year due to less volatile VaR scenarios and moderate risk taking by the trading
desks. Interest rate risk was the most significant stand-alone risk driver of VaR during the year, as the volatility in interest rates
SVaR
As with VaR, the SVaR methodology produces estimates of the potential change in the market value of a portfolio, over a specified
time horizon, at a given confidence level. SVaR is a VaR-based measure using historical data from a one-year period of stressed
market conditions.
A simulation of 99% VaR is run on the current portfolio for each 250-day period from 2005 to the current VaR date, moving forward
one day at a time. The SVaR is the worst VaR outcome of the simulated results.
The internal traded SVaR model captures all trading book positions.
The following table shows 10-day 99% internal SVaR for the trading portfolios of NWM N.V. Group.
2025
2024
Average
Maximum
Minimum
Period end
Average
Maximum
Minimum
Period end
€m
€m
€m
€m
€m
€m
€m
€m
Total internal traded SVaR
5.6
13.8
2.2
3.3
4.6
11.3
2.7
3.9
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
18
Definition (audited)
Non-traded market risk is the risk to the value of assets or
liabilities outside the trading book, or the risk to income, that
arises from changes in market prices such as interest rates,
foreign exchange rates and equity prices, or from changes in
managed rates.
Sources of risk (audited)
Non-traded market risk exists in all balance-sheet exposure that
makes reference to market risk factors, when customer
behaviour could impact the size and timing of the repricing or
maturity of future cash flows, or when valuation of assets and
liabilities is driven by market risk factors such as interest rates or
foreign exchange rates.
The key sources of non-traded market risk for NWM N.V. Group
are interest rate risk, foreign exchange risk and credit spread
risk.
Interest rate risk
Non-traded interest rate risk in NWM N.V. Group mainly arises
from gap risk and basis risk. These sensitivities can give rise to
volatility in net interest income as interest rates vary.
Foreign exchange risk
Non-traded foreign exchange risk arises from two main sources:
•
Structural foreign exchange risk
– mainly arises from
investments in foreign subsidiaries
•
Transactional foreign exchange rate risk
– arises from
customer transactions and profits and losses that are in a
currency other than the functional currency.
Credit spread risk
Non-traded credit spread risk in NWM N.V. Group arises from
Key developments in 2025
•
During the year, NWM N.V. continued to apply the
structural hedging programme of its common equity and
reserves. At 31 December 2025, the notional amount of the
structural hedge in place was €1.5 billion. NWM N.V. policy
is to align the notional of the hedge to its business strategy.
•
Euro medium term notes (EMTNs) and short and medium
term notes (SMTNs) were issued out of Treasury and the
Investor Products desk to fund NWM N.V. Group.
•
NWM N.V. Group’s non-traded VaR remained moderate
and stable year on year given the moderate open positions
in interest rate, foreign exchange and credit spread risks.
•
NWM N.V. continues to diversify the Treasury funding base.
Governance for non-traded market risk is in line with the
Risk appetite
Risk appetite is in line with the approach outlined in the Risk
management framework section.
Quantitative appetite is expressed in terms of exposure limits.
The limits at NWM N.V. Group comprise a VaR measure
supplemented with SVaR, sensitivities, earnings-at-risk and
economic-value-of-equity. Other limits monitored at executive
governance level notably include a stress limit based on the
foreign exchange sensitivity of NWM N.V. Group’s CET1 ratio.
NWM N.V. Group aims to mitigate non-traded market risk, to
the extent possible, by way of hedging transactions with NWM
Group.
Interest rate risk
NWM N.V. Group policy is to manage interest rate sensitivity in
banking book portfolios within defined risk limits which are
monitored and approved by the NWM N.V. Group Management
Risk Committee. Interest rate swaps are used to hedge some
exposures externally.
Key measures used to evaluate non-traded interest rate risk are
subject to approval granted by NWM Group model risk
governance. Limits on non-traded interest rate risk are set
according to the non-trading interest rate and foreign currency
risk policy statement and are subject to NWM N.V. Group
Management Risk Committee approval.
Non-traded interest rate risk is measured using a version of the
same VaR methodology that is used by NWM Group. VaR
metrics are based on interest rate repricing gap reports as at
the reporting date.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
19
Non-traded market risk continued
One–day 99% banking book VaR
One-day banking book VaR at a 99% confidence level for NWM N.V. Group was as follows:
Average
Maximum
Minimum
Period end
€m
€m
€m
€m
2025
0.4
0.7
0.2
0.4
2024
0.4
0.6
0.2
0.5
Foreign exchange risk
Foreign exchange exposures arising from customer transactions are hedged by businesses on a regular basis in line with NatWest
Group policy.
Structural foreign exchange rate risk positions are monitored by NWM N.V. Treasury, as part of an assessment of the overall
sensitivity of NWM N.V.’s CET1 capital ratio to changes in exchange rates.
Gains or losses arising from the retranslation of net investments in overseas operations are recognised in equity reserves.
The table below sets out NWM N.V. Group’s structural foreign currency exposures:
Net investments
Structural
in foreign
foreign currency
operations
exposures
2025
€m
€m
US dollar
8
8
Other non-euro
(1)
(1)
7
7
2024
US dollar
9
9
Other non-euro
(5)
(5)
4
4
Overall, the foreign exchange risk position remained broadly unchanged year on year.
The pre-tax sensitivity of the foreign exchange reserves to changes in exchange rates is proportional to the nominal exposure. At 31
December 2025, a 1% strengthening in all foreign currencies against the euro would result in a €0.07 million increase in foreign
exchange reserves before tax, while a 1% weakening in all foreign currencies against the euro would result in a €0.07 million reduction.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
20
Definition
Regulatory capital consists of reserves and instruments issued
that are available to NWM N.V. Group that have a degree of
permanency and are capable of absorbing losses. A number of
strict conditions set by regulators must be satisfied to be eligible
to count as capital.
Capital adequacy risk is the risk that there is or will be
insufficient capital and other loss absorbing debt instruments to
operate effectively including meeting minimum regulatory
requirements, operating within Board-approved risk appetite
and supporting strategic goals.
Liquidity consists of assets that can be readily converted to cash
within a short timeframe at a reliable value. Liquidity risk is the
risk of being unable to meet financial obligations as and when
they fall due.
Funding consists of on-balance sheet liabilities that are used to
finance assets. Funding risk is the risk of not maintaining a
diversified, stable and cost-effective funding base.
Liquidity and funding risks arise in a number of ways, including
through the maturity transformation role that banks perform.
The risks are dependent on factors such as:
•
Maturity profile.
•
Composition of sources and uses of funding.
•
The quality and size of the liquidity portfolio.
•
Wholesale market conditions.
•
Depositor and investor behaviour.
For a description of sources of capital, liquidity and funding as
utilised by NatWest Group, refer to page 234 of the NatWest
Group plc 2025 Annual Report and Accounts.
Key developments in 2025
NWM N.V. Group diversified its funding sources by executing a
new syndicated loan transaction which provides €475 million
funding.
Regulatory framework
Capital requirements regulation and directive
The European Union (EU) has implemented the Basel III
framework through the CRR and the Capital Requirements
Directive (CRD). The initial package, known as CRD IV, was
implemented on 1 January 2014 on a phased basis with full
implementation completed on 1 January 2019.
On 7 June 2019, amendments to the CRR and CRD (known as
CRR2 and CRD5 respectively) were published in the Official
Journal of the European Union. The majority of these changes
were implemented in June 2021.
The remaining changes relating to the Basel III standard have
been implemented in EU by the new EU Banking Package (CRR
III / CRD VI) for which the European Commission (EC) issued a
proposal in October 2021, with final rules published in June
2024. The EU implementation date was 1 January 2025, except
for Market Risk rules which will be implemented on 1 January
2027. In November 2025, the European Commission issued a
consultation for targeted amendments to the FRTB framework
for Market Risk.
The CRR III changes mainly impact capital requirements for STD
and IRB (AIRB & FIRB) Credit Risk, Market Risk, Credit Valuation
Adjustment (CVA) Risk, Counterparty Credit Risk (CCR) and
Operational Risk.
An aggregate “output floor” was also being introduced to ensure
that total RWAs for firms using advanced or internally modelled
methods and subject to the floor cannot fall below 72.5% of
RWAs under the standardised approach. The output floor
requirement will apply at RBS Holdings N.V. level which is an
approved intermediate parent undertaking (IPU), to the extent
that internal models are being used within RBS Holdings N.V.
Group.
Key elements of the CRR:
Higher and better capital requirements. Banks must have a total
amount of capital that is determined by the following minimum
requirements:
•
The total capital ratio requirement is 11.7%, comprising the
minimum capital requirement of 8%, supplemented with the
capital conservation buffer of 2.5% and the institution
specific countercyclical buffer (CCyB) of 1.2%. The minimum
CET1 ratio is 8.2%, including the minimum capital
requirement of 4.5%. The CCyB is based on the weighted
average of NWM N.V. Group geographical exposures.
•
In addition, NWM N.V. Group is subject to Pillar 2
requirements for CET1, AT1 and T2. Refer to the RBSH
N.V. Pillar 3 report for further details on these additional
capital requirements.
•
The entity is not designated as an O-SII.
Liquidity measures. To ensure banks have sufficient liquidity, the
regulation introduces two liquidity requirements:
•
The Liquidity Coverage Ratio of 100%, which aims to ensure
that banks have enough liquid assets (e.g. cash or other
assets that can be quickly converted into cash with little or
no loss of value) in the short term.
•
The net stable funding requirement of 100%, which aims to
ensure that banks do not rely too much on short-term
funding to fund their medium- and long-term assets.
Limiting leverage. The regulation sets out a binding leverage
ratio, which aims to limit banks from financing too large a
portion of their activities with debt.
•
Minimum Tier 1 leverage ratio of 3.0%.
NWM N.V. Group manages changes to capital requirements
from new regulation (including model changes) and the resulting
impact on the Common Equity Tier 1 ratio alongside its strategy
of risk reduction and de-leveraging. For further information refer
to Capital management on the following page.
Banking Union: Single Supervisory Mechanism
On 15 October 2013, the EU Council formally adopted the
Regulation on the Single Supervisory Mechanism (SSM) which
became operational on 4 November 2014. The SSM is a new
framework for banking supervision in Europe with the aims of
ensuring the safety and soundness of the European banking
system and increasing financial integration and stability in
Europe.
The ECB must ensure that credit institutions not only meet the
minimum prudential capital requirements set by the CRD but
also have an additional buffer reflecting risks or elements of risks
not covered by the minimum requirements in CRD. This is
organised through the framework of the SSM.
The SSM must ensure that credit institutions have sufficient
capital to cover unexpected losses or survive severe stressed
economic and market conditions. The capital joint decision is the
key outcome of the Supervisory Review and Evaluation Process.
In this process, the supervisor reviews the governance and
internal control arrangements used by each individual bank to
manage its risks (i.e., the Internal Capital Adequacy Assessment
Process (ICAAP)).
Overall, this framework governs relations between the ECB,
national supervisors and banks, and is an important step
towards banking union in the EU.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
21
Capital, liquidity and funding risk continued
Capital management
NWM N.V. Group aims to maintain an appropriate level of capital
to meet its business needs (which include requirements of its
ultimate parent company, NatWest Group plc) and regulatory
requirements, whilst operating within an agreed risk appetite.
Determination of appropriate capital levels involves regular Asset
& Liability Management Committee (ALCo) capital monitoring,
planning and forecasts, and ICAAP. Capital plans are subjected
to internal governance reviews, eventually put through
Managing Board oversight and approval, as well as review of
the appropriate supervisory authority.
NWM N.V. Group operates a rigorous capital planning process
via ALCo aimed at ensuring the capital position is controlled
within the agreed parameters. This incorporates regular re-
forecasts of the capital position of NWM N.V. Group. In the event
that the projected position deteriorates below acceptable levels,
NWM N.V. Group would revise business plans accordingly.
NWM N.V. Group manages changes to capital requirements
from new regulation as well as model changes and the resulting
impact on the Common Equity Tier 1 ratio, focusing on risk
reduction and de-leveraging.
Through the ICAAP, NWM N.V. Group determines its desired
capital levels based on three complementary perspectives: the
normative baseline, normative adverse and economic internal
perspective. The normative baseline perspective ensures NWM
N.V.’s capital is managed to comply with current and known
future changes in regulatory capital requirements. In the
normative adverse perspective, NWM N.V. Group’s capital levels
are evaluated through the application of internally defined stress
tests that quantify changes in capital ratios under a range of
scenarios. In the economic internal perspective, NWM N.V.
Group calculates the required capital from an economic point of
view.
Liquidity and funding management
Liquidity and funding management follows a similar process to
that outlined above for capital. Liquidity and funding risk
tolerance forms part of NWM N.V. Group’s risk appetite
statement, which is reviewed and approved by the NWM N.V.
Group Managing Board.
The risk appetite statement defines key metrics, risk trigger
levels and capacity for liquidity and funding management within
NWM N.V. Group. The Board also sets the appetite for funding
risk to ensure that stable sources of funding are used to fund
NWM N.V. Group’s core assets. NWM N.V. Group monitors its
liquidity position against this risk tolerance on a daily basis.
In setting risk limits the Board considers the nature of NWM N.V.
Group’s activities, overall risk appetite, market best practice and
regulatory compliance.
In implementing NWM N.V. Group’s liquidity risk management
framework, a suite of tools is used to monitor, limit and stress
test the risks within the balance sheet. Limits are established to
manage the level of liquidity risk, and these include thresholds
for the amount and composition of funding sources, asset and
liability mismatches, and funding concentrations.
NWM N.V. Group maintained a strong liquidity position, with the
Liquidity Coverage Ratio (LCR) at 181% as at 31 December
2025. The comparative LCR as at 31 December 2024 has been
restated from 247% to 244%.
Liquidity portfolio management
The size of the portfolio is determined by referencing NatWest
Group’s liquidity risk appetite. NatWest Group retains a prudent
approach to setting the composition of the liquidity portfolio,
which is subject to internal policies and limits over quality of
counterparty, maturity mix and currency mix.
Within the liquidity portfolio, NWM N.V. Group holds cash at
central banks of €7.6 billion (2024 – €6.2 billion) and government
and other high-quality securities of €1.1 billion (2024 – €1.3
billion).
Funding risk management
Funding is raised through deposits from the money market, the
issuance of EMTN’s, commercial papers, syndicated loans and
capital instruments. During 2025, NWM N.V. Group issued €0.5
billion in senior unsecured notes through private placements
under its Euro Medium Term Note (EMTN) programme (2024 -
€0.5 billion).
Governance
The ALCo is responsible for ensuring NWM N.V. Group maintains
adequate capital, liquidity and funding at all times. The ALCo
manages and plans NWM N.V. Group’s adequacy levels taking
into account current and projected levels and provides input to
and oversees levels established within the framework of the
ICAAP and ILAAP.
ALCo also plans and manages capital, liquidity and funding
interaction with NatWest Group. Such interaction would need to
be capital neutral to NatWest Group and are required to be
structured in such a way so as to satisfy the ECB and PRA
regulatory requirements. The ALCo is in turn ultimately
governed by NWM N.V. Group’s Managing Board, which
approves ALCo and ICAAP and ILAAP decisions.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
22
Capital, liquidity and funding risk continued
Capital ratios and risk-weighted assets
NWM N.V. Group aims to maintain an appropriate level of capital to meet its business needs and regulatory requirements. NWM N.V.
Group’s capital ratios and RWAs on a CRR transitional basis are set out below. Refer to Note 21 to the consolidated financial
statements for a more detailed breakdown of regulatory capital.
2025
2024
Capital ratios
%
%
Common Equity Tier 1 (CET1)
(1)
18.5
19.0
Tier 1
(1)
21.7
21.9
Total
(1)
23.2
23.7
Risk-weighted assets
€m
€m
Credit risk
(1)
6,535
6,953
Market risk
(2)
740
1,107
Operational risk
592
489
Total RWAs
(1)
7,867
8,549
(1)
Comparative capital ratios and RWAs as at 31 December 2024 (based on Basel III regulations applicable before the 2025 changes) have been restated to correct a prior period error in
the calculation of Counterparty Credit Risk RWAs. Total RWAs increased by €608 million, reducing the CET1 ratio from 20.4% to 19.0%, the Tier 1 ratio from 23.6% to 21.9%, and the
Total Capital ratio from 25.5% to 23.7%.
(2)
Market Risk risk-weighted assets include Credit Valuation Adjustment (CVA) risk-weighted assets.
•
The CET1 ratio decreased from 19.0% to 18.5%, driven by
reductions in both CET1 capital and RWAs.
•
CET1 capital decreased by €164 million, primarily due to
the proposed €53 million dividend distribution out of prior
year earnings to RBSH N.V. and higher regulatory capital
deductions. These deductions include an increased deferred
tax asset deduction and an additional €74 million CET1
deduction arising from the ECB Prudential Valuation on-site
inspection. As the current-year profit will be distributed as a
dividend, it has no impact on CET1 capital.
•
RWAs decreased from €8.5 billion to €7.9 billion, with the
movement largely driven by a reduction in credit risk in and
market risk, partially offset by higher operational risk. Credit
risk and market risk RWAs both fell by €0.4 billion, mainly
due to the Basel 3.1 implementation.
The table below shows NWM N.V. Group’s primary funding sources.
2025
2024
€m
%
€m
%
Bank deposits
975
5.2
597
3.6
Customer deposits
4,968
26.6
2,999
17.9
Trading liabilities
(1)
6,751
36.2
7,061
42.3
Other financial liabilities
3,679
19.7
3,368
20.2
Subordinated liabilities
290
1.5
303
1.8
Amounts due to holding companies and fellow subsidiaries
(2)
2,008
10.8
2,380
14.2
Total funding
18,671
100
16,708
100
(1)
Trading liabilities excludes short positions of nil (2024 – nil).
(2)
Amounts due to holding companies and fellow subsidiaries relating to non-financial instruments of €28 million (2024 – €31 million) and settlement balances of €75 million (2024 - €147
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
23
Definition (audited)
Credit risk is the risk that customers, counterparties or issuers fail
to meet a contractual obligation to settle outstanding amounts.
NWM N.V. Group is exposed to credit risk through lending,
derivatives and off-balance sheet products such as trade finance
and guarantees. NWM N.V. Group is also exposed to credit risk as
Key developments in 2025 (audited)
•
Despite a challenging macro-economic environment due to
geopolitical volatility, trade tensions, moderate economic
growth and rising government debt, the credit portfolio
remained stable.
•
The change in outlook was reflected in the probability weight
for the macroeconomic scenarios in the IFRS 9 calculations
with a slightly more downside skew and assuming moderate
growth for the next five years.
•
The current and potential credit exposure increased in the
context of planned business growth and the asset transfer
from NatWest Bank Europe.
•
NWM N.V. Group implemented Basel 3.1 and moved to the
Foundation Internal Ratings Based (FIRB) approach.
Governance (audited)
Risk governance for credit risk is in line with the approach outlined
Risk appetite
Risk appetite for credit risk is in line with the approach outlined in
the Risk management framework section.
Identification and measurement
Risks are identified through relationship management and credit
stewardship of customers and portfolios. Credit stewardship takes
place throughout the customer relationship, beginning with the
initial approval. It includes the application of credit assessment
standards, credit risk mitigation, ensuring that credit
documentation is complete and appropriate, carrying out regular
portfolio or customer reviews and problem debt identification and
management.
Assessment and monitoring
Customers, which includes businesses corporates, banks and
other financial institutions, are typically managed on an individual
basis. Customers are aggregated as a single risk when sufficiently
interconnected to the extent that a failure of one could lead to the
failure of another.
A risk-based credit assessment is carried out before taking credit
risk. The assessment process depends on the complexity of the
transaction. Higher-risk and larger transactions involve more
analysis that can include on-site due diligence.
Credit quality and loss given default (LGD) are reviewed annually.
The review process assesses borrower performance, the
adequacy of security, compliance with terms and conditions, and
refinancing risk.
Mitigation
Mitigation techniques outlined in the credit risk toolkits and
transactional acceptance standards are applied in managing
credit portfolios across NWM N.V. Group. These techniques
mitigate credit concentrations related to individual customers,
borrower groups or a collection of related borrowers. Where
possible, customer credit balances are netted against obligations.
Mitigation tools may involve structuring security interests in
physical or financial assets, using credit derivatives such as credit
default swaps, credit-linked debt instruments and securitisation
structures, and utilising guarantees or similar instruments
(including credit insurance) from related and third parties.
Problem debt management
When stress or financial difficulties are identified, NWM N.V. Group
collaborates closely with customers to support them.
NWM N.V. Group uses a range of early warning indicators to
identify customers that may be exposed to emerging risks,
including financial stress, allowing for increased monitoring where
necessary. Early warning indicators may be internal, such as a
customer’s bank account activity, or external, such as the share
price of a publicly listed customer. When these indicators suggest
that a customer is experiencing potential or actual difficulty, or if
relationship managers or credit officers observe other signs of
financial difficulty, the customer may be classified within the
Wholesale Problem Debt Management framework.
Wholesale Problem Debt Management framework
This framework is designed to provide early identification of credit
deterioration, support intelligent risk-taking, ensure fair and
consistent customer outcomes and provide key insights into
customer lending portfolios.
Customer Lending Support
Customer Lending Support is a centre of expertise that provides
support to customers in financial stress.
Forbearance occurs when a concession is made on the
contractual terms of a debt in response to a customer’s financial
difficulties.
The aim of forbearance is to help the customer regain financial
stability while reducing risk. To ensure that forbearance is
appropriate for the customer, minimum standards are applied
when assessing, recording, monitoring and reporting forbearance.
Forbearance may involve covenant waivers, amendments to
margins, payment concessions and loan rescheduling (including
extensions in contractual maturity), capitalisation of arrears, and
debt forgiveness or debt-for-equity swaps.
Customer probability of default (PD) and LGD are reassessed
prior to finalising any forbearance arrangement. The ultimate
outcome of a forbearance strategy is highly dependent on the co-
operation of the borrower and a viable business or repayment
outcome. If forbearance becomes unsuitable or is unsuccessful,
NWM N.V. Group may pursue repayment, enforcement of security
or insolvency proceedings, although these are options of last
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
24
Credit risk continued
IFRS 9 models
IFRS 9 models provide PD, exposure at default (EAD) and LGD for
the purpose of calculating ECL.
Model build
Risk ranking is normally the same as for internal ratings based
(IRB) models to maintain consistency in risk measurement.
Economic drivers are incorporated, normally by using stress
models. Term structures are used to assess the risk of loss
beyond 12 months that will affect lifetime loss for exposures which
have significantly deteriorated (Stage 2) or defaulted (Stage 3).
Model application
Model application involves selecting forward-looking economic
scenarios and assigning appropriate probability weights.
Model design principles
The modelling of ECL under IFRS 9 adopts the standard approach
of breaking down credit loss estimation into its component parts
of PD, LGD and EAD. To comply with IFRS 9, these model
parameters are designed with the following characteristics:
•
Unbiased – provide a best estimate.
•
Point-in-time – reflecting current economic conditions as
opposed to through-the-cycle.
•
Economic forecasts – IFRS 9 PD estimates and, where
appropriate, EAD and LGD estimates reflecting economic
forecasts.
•
Lifetime measurement – parameters are provided as multi-
period term structures up to behavioural lifetimes.
PD
PD models use a point-in-time/through-the-cycle framework to
provide point-in-time estimates that reflect economic conditions at
the reporting date. A key driver is the score from related IRB PD
models, with economic forecasts incorporated through the stress
models.
LGD
Economic forecasts are incorporated into LGD estimates using the
existing point-in-time/through-the-cycle framework. However, for
some portfolios, including low-default, sovereigns and banks, there
is insufficient loss data to substantiate estimates that vary with
economic conditions.
EAD
EAD values rely on product-specific credit conversion factors
(CCFs), closely mirroring the product segmentation and approach
of the respective IRB model, but without conservative or downturn
assumptions. These CCFs are estimated over multi-year time
horizons.
Introduction
The portfolio segmentation and selection of economic drivers for
IFRS 9 follows the approach used in stress testing. The stress
models for each portfolio segment (defined by product or asset
class and where relevant, industry sector and region) are based
on a selected, small number of economic variables that best
explain the movements in portfolio loss rates. The process to
select economic drivers uses empirical analysis and expert
judgement.
The key economic variables in NWM N.V. Group include national
gross domestic product (GDP), unemployment rate and the
central bank base rate.
Economic scenarios
At 31 December 2025, the range of anticipated future economic
conditions was defined by a set of four internally developed
scenarios and their respective probabilities. In addition to the base
case, they comprised upside, downside and extreme downside
scenarios.
For 31 December 2025, the four scenarios were deemed
appropriate in capturing the uncertainty in economic forecasts
and the non-linearity in outcomes under different scenarios. These
four scenarios were developed to provide sufficient coverage to
current risks faced by the economy and consider varying
outcomes across the labour market, inflation, interest rate, asset
price and economic growth, around which there remains
pronounced levels of uncertainty.
Risk and capital management continued
Credit risk continued
NatWest Markets N.V.
Annual Report and Accounts 2025
25
High-level narrative – potential developments, vulnerabilities and risks
Outperformance sustained
– above trend growth as consumer sentiment recovers
Upside
Steady growth
– staying close to trend pace
Base case
Stalling
– cautious consumer and policy uncertainty weighs on activity
Downside
Growth
Extreme stress
– extreme fall in GDP, with policy support to facilitate sharp
recovery
Extreme downside
Sticky
– strong growth and/or wage policies keep services inflation above target in
medium term
Upside
Battle won
– 2% target is met on a sustained basis
Base case
Slow
– above target inflation in 2026 but swiftly falls to lower levels
Downside
Inflation
Close to deflation
– inflationary pressures diminish amidst pronounced weakness in
demand
Extreme downside
Recovery
– job growth rebounds strongly
Upside
Cooling continues
– labour market remains resilient
Base case
Job shedding
– redundancies, reduced hours, building slack
Downside
Labour market
Depression
– unemployment hits levels close to previous peaks amid severe stress
Extreme downside
Steady
– rate cutting cycle largely done
Upside/Base case
Supportive
– sharp declines to support recovery
Downside
Rates
short-term
Sharp drop
– drastic easing in policy to support a sharp deterioration in the
economy
Extreme downside
Middle
– c.2%
Upside/Base case
Rates
long-term
Low
– c.1% and below
Downside/Extreme downside
Risk and capital management continued
Credit risk continued
NatWest Markets N.V.
Annual Report and Accounts 2025
26
Economic drivers (audited)
Main macroeconomic variables
The main macroeconomic variables for these scenarios are set out in the table below. The compound annual growth rate (CAGR) for
GDP as well as the five-year average for unemployment and the European Central Bank main refinancing rate.
2025
2024
Upside
Base case
Downside
Extreme
downside
Weighted
average
Upside
Base case
Downside
Extreme
downside
Weighted
average
Five-year summary
%
%
%
%
%
%
%
%
%
%
GDP - CAGR
1.9
1.3
0.8
0.1
1.2
2.0
1.3
0.8
(0.3)
1.2
Unemployment rate - average
5.7
6.1
7.2
8.8
6.6
5.7
6.3
7.1
9.5
6.7
European Central Bank
- main refinancing rate - average
2.2
2.2
1.5
0.7
1.9
3.4
2.6
2.3
0.7
2.5
Probability weight
22.4
45.0
19.5
13.1
23.2
45.0
19.1
12.7
-
(1)
The five-year summary runs from 2025-2029 for 31 December 2025 and from 2024-2028 for 31 December 2024.
Probability weightings of scenarios
NWM N.V. Group applies a quantitative approach for IFRS 9
multiple economic scenarios by selecting specific discrete
scenarios that represent the range of risks in the economic
outlook and assigning appropriate probability weights.
The approach involves comparing GDP paths for NWM N.V.
Group’s scenarios against a set of 1,000 model simulations to
determine the percentile in the distribution that aligns most closely
with each scenario. The probability weight for the base case is
determined first using judgement, while probability weights for the
alternative scenarios are then assigned based on these
percentiles scores.
The weights were broadly comparable to those used at 31
December 2024 but with slightly more downside skew. The
assigned probability weights were judged to be aligned with the
subjective assessment of balance of the risks in the economy.
Given the balance of risks that the economies in which NWM N.V.
Group operates are exposed to, NWM N.V. Group judges it
appropriate that downside-biased scenarios have higher
combined probability weights than the upside-biased scenario. It
presents good coverage to the range of outcomes assumed in the
scenarios, including the potential for a robust recovery on the
upside and exceptionally challenging outcomes on the downside.
A 22.4% weighting was applied to the upside scenario, a 45.0%
weighting applied to the base case scenario, a 19.5% weighting
applied to the downside scenario and a 13.1% weighting applied
to the extreme downside scenario.
Risk and capital management continued
Credit risk continued
NatWest Markets N.V.
Annual Report and Accounts 2025
27
Economic drivers (audited)
Annual figures
Upside
Base case
Downside
Extreme
downside
Weighted
average
Eurozone GDP - annual growth
%
%
%
%
%
2025
1.4
1.4
1.4
1.4
1.4
2026
1.3
1.1
(0.2)
(3.4)
0.3
2027
3.1
1.5
0.3
(0.1)
1.4
2028
2.1
1.4
1.2
1.5
1.5
2029
1.5
1.4
1.1
1.3
1.3
2030
1.5
1.4
1.1
1.2
1.3
Upside
Base case
Downside
Extreme
downside
Weighted
average
Eurozone - unemployment rate - annual average
%
%
%
%
%
2025
6.3
6.3
6.3
6.3
6.3
2026
6.0
6.3
6.9
7.9
6.5
2027
5.5
6.1
7.6
10.3
6.8
2028
5.3
6.0
7.8
10.3
6.7
2029
5.3
5.9
7.2
9.1
6.5
2030
5.3
5.9
6.7
7.8
6.2
Upside
Base case
Downside
Extreme
downside
Weighted
average
European Central Bank - main refinancing rate - annual average
%
%
%
%
%
2025
2.4
2.4
2.4
2.4
2.4
2026
2.2
2.2
1.5
0.7
1.8
2027
2.2
2.2
1.2
-
1.7
2028
2.2
2.2
1.2
-
1.7
2029
2.2
2.2
1.2
0.2
1.7
2030
2.2
2.2
1.3
1.2
1.9
Worst points
2025
2024
Eurozone
Downside
%
Quarter
Extreme
downside
%
Quarter
Downside
%
Quarter
Extreme
downside
%
Quarter
GDP
-
Q4 2026
(3.5)
Q4 2026
-
Q1 2024
(4.0)
Q4 2025
Unemployment rate - peak
(1)
7.9
Q1 2028
10.9
Q4 2027
7.7
Q4 2026
11.8
Q4 2026
(1)
For the unemployment rate, the figures show the peak levels. For GDP, the figures show falls relative to the starting period.
The calculations are performed over five years, with a
starting point of Q4 2024 for 31 December 2025 scenarios and Q4 2023 for 31 December 2024 scenarios.
Risk and capital management continued
Credit risk continued
NatWest Markets N.V.
Annual Report and Accounts 2025
28
Impairment, provisioning and write-offs (audited)
In the overall assessment of credit risk, impairment provisioning
and write-offs are used as key indicators of credit quality.
Significant increase in credit risk (SICR)
Defaulted exposures are classified in Stage 3 and subject to
lifetime ECL measurement. Remaining exposures are assessed
for SICR since initial recognition. Where exposures are identified
with SICR, they are classified in Stage 2 and assessed using a
lifetime ECL measurement. Exposures not considered
deteriorated are assessed with a 12-month ECL. NWM N.V.
Group applies a framework to identify deterioration, primarily
based on changes in lifetime PD, supported by additional
qualitative high-risk backstops.
•
IFRS 9 lifetime PD assessment (the primary driver) – relies on
measuring the relative deterioration in forward-looking
lifetime PD and is assessed monthly. SICR is determined by
comparing the residual lifetime PD at the balance sheet date
with the lifetime PD at the date of initial recognition (DOIR). If
the current lifetime PD exceeds the origination PD by more
than a defined threshold, SICR is assumed to have occurred
and the exposure moved into Stage 2 for a lifetime ECL
assessment. For Non-Personal, a doubling of PD would
indicate a SICR, subject to a minimum PD uplift of 0.1%.
•
Qualitative high-risk backstop assessment – supplements the
PD assessment to evaluate whether significant deterioration
in lifetime risk of default occurred. This included the
mandatory 30+ days past due backstop, as prescribed by
IFRS 9 guidance, as well as other elements such as
forbearance support and exposures managed within the
Wholesale Problem Debt framework.
Lifetime
The definitions of initial recognition and asset lifetime are
important considerations when determining the amount of
lifetime losses to be applied.
•
Initial recognition refers to the date that a transaction (or
account) is first recognised on the balance sheet, with the
PD at that point serving as the basis for subsequent
determination of SICR, as detailed above.
•
For asset lifetime, the approach is aligned with IFRS 9
requirements:
•
Term lending – the contractual maturity date is used and
adjusted for behavioural trends where applicable, such as
expected prepayment and amortisation.
•
Revolving facilities – asset duration is based on annual
customer review schedules and would be set to the next
review date.
Governance
The IFRS 9 PD, EAD and LGD models are subject to NatWest
Group’s model risk policy, which stipulates periodic model
monitoring and re-validation and defines approval procedures
and authorities according to model materiality. Post model
adjustments are applied where management deemed them
necessary to ensure an adequate level of overall ECL provision.
All post model adjustments undergo review, challenge and
approval by the relevant model or provisioning committees.
Post model adjustments will remain a key focus area of NWM
N.V. Group’s ongoing ECL adequacy assessment process. A
comprehensive framework has been established that
incorporates analysis of diverse economic data, external
benchmarks and portfolio performance trends with a particular
focus on segments that may be more susceptible to specific risk
factors.
There was €4 million of ECL post model adjustments in the year
(2024 – €2 million).
Measurement uncertainty and ECL sensitivity
analysis (audited)
The recognition and measurement of ECL is complex and
requires significant judgement and estimation, especially during
times of economic volatility and uncertainty. This includes the
formulation and incorporation of multiple forward-looking
economic conditions into ECL to meet the measurement
objectives of IFRS 9. The ECL provision is sensitive to the model
inputs and economic assumptions used in the estimation.
Simulations were conducted to assess the impact of various
economic scenarios, including base case, upside, downside and
extreme downside scenarios. The potential ECL impacts
reflected the simulated impact as at 31 December 2025.
In the simulations, NWM N.V. Group assumed that the economic
macro variables associated with each scenario would replace
the existing base case economic assumptions, giving them a
100% probability weighting and therefore serving as a single
economic scenario.
These scenarios were applied to all modelled portfolios in the
table, with the simulation affecting both PDs and LGDs. Post
model adjustments included in the ECL estimates were adjusted
in line with the modelled ECL movements. However, adjustments
that were judgemental in nature, such as those for deferred
model calibrations and economic uncertainty, were not
automatically recalculated. Instead, they will be re-evaluated by
management through ECL governance for any new economic
scenario outlook.
As expected, the scenarios created varying impacts on ECL by
portfolio, and these impacts were deemed reasonable.
The simulations assumed that existing modelled relationships
between key economic variables and drivers would hold.
However, in practice, other factors such as potential changes in
customer behaviour and policy changes could also impact the
wider availability of credit.
The focus of the simulations was on ECL provisioning
requirements for performing exposures in Stage 1 and Stage 2.
The simulations were run on a stand-alone basis and were
independent of each other. Scenario impacts on SICR were
considered when evaluating the ECL movements of Stage 1 and
Stage 2. In all scenarios, the total exposure remained the same,
but exposure by stage varied.
Stage 3 provisions are not subject to the same level of
measurement uncertainty, as default is an observed event as at
the balance sheet date and defaulted LGD is typically more
impacted by borrower specific factors rather than economics.
Therefore, Stage 3 provisions were not considered in this
analysis. NWM N.V. Group’s core criterion for identifying a SICR
is based on PD deterioration. Under the simulations, changes in
PDs resulted in exposures moving between Stage 1 and Stage
2, contributing to the ECL impact.
Risk and capital management continued
Credit risk continued
NatWest Markets N.V.
Annual Report and Accounts 2025
29
Moderate
Moderate
Extreme
upside
downside
downside
2025
Actual
Base scenario
scenario
scenario
scenario
Stage 1 modelled loans (€m)
1,825
1,876
1,876
1,824
1,708
Stage 1 modelled ECL (€m)
8
7
6
8
17
Stage 1 coverage (%)
0.44%
0.37%
0.32%
0.44%
1.00%
Stage 2 modelled loans (€m)
132
81
81
133
249
Stage 2 modelled ECL (€m)
4
4
4
5
11
Stage 2 coverage (%)
3.03%
4.94%
4.94%
3.76%
4.42%
Stage 1 and Stage 2 modelled loans (€m)
1,957
1,957
1,957
1,957
1,957
Stage 1 and Stage 2 modelled ECL (€m)
12
11
10
13
28
Stage 1 and Stage 2 coverage (%)
0.61%
0.56%
0.51%
0.66%
1.43%
Variance to actual total Stage 1 and Stage 2 ECL
-
(1)
(2)
1
16
Reconciliation to Stage 1 and Stage 2 flow exposures (€m)
Modelled loans
1,957
1,957
1,957
1,957
1,957
Other asset classes
10,161
10,161
10,161
10,161
10,161
(1)
Reflects ECL for all modelled exposure in scope for IFRS 9. The analysis excludes non-modelled portfolios and exposure relating to bonds and cash.
(2)
All simulations are run on a stand-alone basis and are independent of each other, with the potential ECL impact reflecting the simulated impact as at 31 December 2025. The simulations
change the composition of Stage 1 and Stage 2 exposure, but total exposure was unchanged under each scenario as the loan population was static.
(3)
Refer to the Economic drivers section for details of economic scenarios.
(4)
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
30
This section details the credit risk profile of NWM N.V. Group’s trading activities.
Derivatives (audited)
The table below shows third party derivatives by type of contract. The master netting agreements and collateral shown do not result
in a net presentation on the balance sheet under IFRS.
2025
2024
Notional
GBP
USD
EUR
Other
Total
Assets
Liabilities
Notional
Assets
Liabilities
€bn
€bn
€bn
€bn
€bn
€m
€m
€bn
€m
€m
Gross exposure
5,974
5,291
8,092
6,799
IFRS offset
(178)
(178)
(293)
(293)
Carrying value
28
95
1,204
45
1,372
5,796
5,113
1,127
7,799
6,506
Of which:
Interest rate
(1)
10
15
1,144
1
1,170
3,954
2,539
919
3,968
2,596
Exchange rate
18
80
60
44
202
1,840
2,567
208
3,831
3,903
Credit
-
-
-
-
-
2
7
-
7
Equity and commodity
-
-
-
-
-
-
-
-
-
-
Carrying value
1,372
5,796
5,113
1,127
7,799
6,506
Counterparty mark-to-market
netting
(2,669)
(2,669)
(3,870)
(3,870)
Cash collateral
(2,217)
(1,698)
(2,550)
(1,947)
Securities collateral
(621)
(352)
(886)
(117)
Net exposure
289
394
493
572
Banks
(2)
18
54
87
13
Other financial institutions
(3)
183
139
193
263
Corporate
(4)
88
195
213
271
Government
(5)
-
6
-
25
Net exposure
289
394
493
572
UK
2
2
1
2
Europe
284
391
486
565
US
-
1
1
5
RoW
3
-
5
-
Net exposure
289
394
493
572
Asset quality of uncollateralised derivative assets
AQ1-AQ4
252
409
AQ5-AQ10
37
84
Net exposure
289
493
(1)
The notional amount of interest rate derivatives includes €1,036 billion (2024 – €795 billion) in respect of contracts cleared through central clearing counterparties.
(2)
Transactions with certain counterparties with which NWM N.V. Group has netting arrangements but collateral is not posted on a daily basis; certain transactions with specific terms that
may not fall within netting and collateral arrangements; derivative positions in certain jurisdictions where the collateral agreements are not deemed to be legally enforceable.
(3)
Includes transactions with securitisation vehicles and funds where collateral posting is contingent on NWM N.V. Group’s external rating.
(4)
Mainly large corporates with which NWM N.V. Group may have netting arrangements in place with no collateral posting.
(5)
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
31
Introduction
This section details the credit risk profile of NWM N.V. Group’s banking activities.
Refer to Accounting policy 4.11 and Note 12 to the consolidated financial statements for policies and critical judgements relating to
impairment loss determination.
Refer to Note 9 to the consolidated financial statements for balance sheet analysis of financial assets that are classified as amortised
cost or fair value through other comprehensive income (FVOCI), the starting point for IFRS 9 ECL framework assessment.
31 December 2025
31 December 2024
Gross
ECL
Net
Gross
ECL
Net
€bn
€bn
€bn
€bn
€bn
€bn
Balance sheet total gross amortised cost and FVOCI
11.7
10.3
In scope of IFRS 9 ECL framework
11.6
9.4
% in scope
99%
91%
Loans to customers - in scope - amortised cost
1.4
-
1.4
0.9
-
0.9
Loans to banks - in scope - amortised cost
0.6
-
0.6
0.2
-
0.2
Total loans - in scope
2.0
-
2.0
1.1
-
1.1
Stage 1
1.9
-
1.9
1.0
-
1.0
Stage 2
0.1
-
0.1
0.1
-
0.1
Other financial assets - in scope - amortised cost
8.9
-
8.9
7.7
-
7.7
Other financial assets - in scope - FVOCI
0.7
-
0.7
0.6
-
0.6
Total other financial assets - in scope
9.6
-
9.6
8.3
-
8.3
Stage 1
9.6
-
9.6
8.3
-
8.3
Out of scope of IFRS 9 ECL framework
0.1
na
0.1
0.9
na
0.9
Other financial assets - out of scope - amortised cost
0.1
na
0.1
0.9
na
0.9
na = not applicable
The assets outside the scope of IFRS 9 ECL framework were as follows:
•
Settlement balances, items in the course of collection, cash balances and other non-credit risk assets of €129 million (2024 – €883
million). These were assessed as having no ECL unless there was evidence that they were defaulted.
•
Equity shares of nil (2024 – nil million) as not within the IFRS 9 ECL framework by definition.
Total
contingent liabilities (including financial guarantees) and commitments within IFRS 9 ECL scope were €8,147 million (2024 –
€7,470 million), comprised Stage 1 €7,940 million (2024 – €7,397 million); Stage 2 €207 million (2024 – €73 million); and Stage 3 nil
Risk and capital management continued
Credit risk – Banking activities continued
NatWest Markets N.V.
Annual Report and Accounts 2025
32
Portfolio summary (audited)
The table below shows gross loans and ECL, by stage, within the scope of the IFRS 9 ECL framework.
2025
2024
€m
€m
Loans - amortised cost and FVOCI
Stage 1
1,901
996
Stage 2
121
118
Stage 3
-
34
Inter-Group
(1)
284
64
Total
2,306
1,212
ECL provisions
Stage 1
8
5
Stage 2
4
2
Stage 3
-
1
Total
12
8
ECL provisions coverage
(2)
Stage 1 (%)
0.42
0.50
Stage 2 (%)
3.31
1.69
Stage 3 (%)
-
2.94
Total
0.59
0.70
Other financial assets
- gross exposure
9,569
8,297
Other financial assets
- ECL provisions
2
1
Impairment charge/(releases)
ECL charge/(release) - third party
(3)
5
(1)
Amounts written-off
1
-
(1)
The NWM N.V. intercompany assets were classified in Stage 1. The ECL for these loans was €0.1 million (2024 – nil).
(2)
ECL provisions coverage is calculated as ECL provisions divided by loans – amortised cost and FVOCI. It is calculated on loans and total ECL provisions, including ECL for other (non-
loan) assets and unutilised exposure. Some segments with a high proportion of debt securities or unutilised exposure may result in a not meaningful coverage ratio.
(3)
Includes €0.5 million charge (2024 – €1.3 million release) related to other financial assets and nil release (2024 – €0.1 million) relating to contingent liabilities.
(4)
The table shows gross loans only and excludes amounts that are outside the scope of the ECL framework. Refer to page 31 for Financial instruments within the scope of the IFRS 9 ECL
framework for further details. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling €7.6 billion (2024 – €6.2 billion) and
debt securities of €2.0 billion (2024 – €2.1 billion).
(5)
NWM N.V. held collateral against third party loans in Stage 3 of €nil (2024 – €32.4 million) and against Stage 1 and Stage 2 third party loans of €462 million (2024 – €258 million). Inter-
group loans were uncollateralised.
•
The NatWest Bank Europe asset transfer was the main
driver of portfolio growth.
•
Active risk mitigation resulted in a relatively smaller increase
in ECL versus the portfolio growth.
•
The portfolio remains of good quality with the majority of
assets remaining in Stage 1.
•
The movements from Stage 1 into Stage 2 were largely
offset by improvements in Stage 2 assets and corresponding
movements from Stage 2 into Stage 1
•
Stage 3 assets were fully cleared through disposals.
•
The increase in inter-group assets was the result of risk
transfers.
Risk and capital management continued
Credit risk – Banking activities continued
NatWest Markets N.V.
Annual Report and Accounts 2025
33
Sector analysis – portfolio summary (audited)
The table below shows financial assets and off-balance sheet exposures gross of ECL and related ECL provisions, impairment by
sector, asset quality and geographical region based on the country of operation of the customer. The tables below show only third-
party exposures and related ECL provisions, charges and write-offs.
Corporate &
Financial
other
institutions
Sovereign
Total
2025
(1)
€m
€m
€m
€m
Loans by geography
930
1,092
-
2,022
- The Netherlands
61
57
-
118
- Other Europe
719
720
-
1,439
- RoW
150
315
-
465
Loans by asset quality
(1)
930
1,092
-
2,022
- AQ2
-
36
-
36
- AQ3
10
75
-
85
- AQ4
274
551
-
825
- AQ5
186
375
-
561
- AQ6
297
24
-
321
- AQ7
153
31
-
184
- AQ8
10
-
-
10
Loans by stage
930
1,092
-
2,022
- Stage 1
848
1,053
-
1,901
- Stage 2
82
39
-
121
Weighted average life
(2)
-
ECL measurement (years)
4
5
-
4
Weighted average 12 months PDs
(2)
- IFRS 9 (%)
1.24
0.40
-
0.80
- Basel (%)
1.33
0.45
-
0.85
ECL provisions by geography
10
2
-
12
- The Netherlands
1
-
-
1
- Other Europe
8
2
-
10
- RoW
1
-
-
1
ECL provisions by stage
10
2
-
12
- Stage 1
6
2
-
8
- Stage 2
4
-
-
4
ECL provisions coverage (%)
1.08
0.18
-
0.59
- Stage 1 (%)
0.71
0.19
-
0.42
- Stage 2 (%)
4.88
-
-
3.31
ECL charge
-
third party
4
1
-
5
Amounts written-off
1
-
-
1
Other financial assets by asset quality
(1)
273
1,173
8,123
9,569
- AQ1-AQ4
265
997
8,123
9,385
- AQ5-AQ8
8
176
-
184
Off-balance sheet
7,036
1,111
-
8,147
- Loan commitments
7,036
584
-
7,620
- Financial guarantees
-
527
-
527
Off-balance sheet by asset quality
(1)
7,036
1,111
-
8,147
- AQ1-AQ4
6,329
1,062
-
7,391
- AQ5-AQ8
707
49
-
756
For the notes to this table refer to the following page.
Risk and capital management continued
Credit risk – Banking activities continued
NatWest Markets N.V.
Annual Report and Accounts 2025
34
Sector analysis – portfolio summary (audited)
Corporate &
Financial
other
institutions
Sovereign
Total
2024 (1)
€m
€m
€m
€m
Loans by geography
483
665
-
1,148
- The Netherlands
36
45
-
81
- Other Europe
336
372
-
708
- RoW
111
248
-
359
Loans by asset quality
(2)
483
665
-
1,148
- AQ1
-
38
-
38
- AQ2
-
184
-
184
- AQ3
13
3
-
16
- AQ4
192
437
-
629
- AQ5
22
-
-
22
- AQ6
107
-
-
107
- AQ7
110
3
-
113
- AQ8
5
-
-
5
- AQ10
34
-
-
34
Loans by stage
483
665
-
1,148
- Stage 1
384
612
-
996
- Stage 2
65
53
-
118
- Stage 3
34
-
-
34
Weighted average life
(2)
- ECL measurement (years)
4
2
-
3
Weighted average 12 months PDs
(2)
- IFRS 9 (%)
1.45
0.14
-
0.68
- Basel (%)
1.46
0.12
-
0.65
ECL provisions by geography
6
2
-
8
- Other Europe
5
2
-
7
- RoW
1
-
-
1
ECL provisions by stage
6
2
-
8
- Stage 1
3
2
-
5
- Stage 2
2
-
-
2
- Stage 3
1
-
-
1
ECL provisions coverage (%)
1.24
0.30
-
0.70
- Stage 1 (%)
0.78
0.33
-
0.50
- Stage 2 (%)
3.08
-
-
1.69
- Stage 3 (%)
2.94
-
-
2.94
ECL release - third party
-
(1)
-
(1)
Other financial assets by asset quality
(1)
96
1,496
6,705
8,297
- AQ1-AQ4
93
1,421
6,705
8,219
- AQ5-AQ8
3
75
-
78
Off-balance sheet
6,349
1,121
-
7,470
- Loan commitments
6,349
609
-
6,958
- Financial guarantees
-
512
-
512
Off-balance sheet by asset quality
(1)
6,349
1,121
-
7,470
- AQ1-AQ4
6,171
1,070
-
7,241
- AQ5-AQ8
178
51
-
229
(1)
AQ bandings are based on Basel PDs and mapping is as follows:
Internal asset quality band
Probability of default range
Indicative S&P rating
AQ1
0% - 0.034%
AAA to AA
AQ2
0.034% - 0.048%
AA to AA-
AQ3
0.048% - 0.095%
A+ to A
AQ4
0.095% - 0.381%
BBB+ to BBB-
AQ5
0.381% - 1.076%
BB+ to BB
AQ6
1.076% - 2.153%
BB- to B+
AQ7
2.153% - 6.089%
B+ to B
AQ8
6.089% - 17.222%
B- to CCC+
AQ9
17.222% - 100%
CCC to C
AQ10
100%
D
(2)
Not within the scope of the independent auditors’ report.
•
The increase in sub-investment grade credit exposure
and resulting deterioration in average portfolio PD was
driven by the NatWest Bank Europe transfer.
•
The sub-investment grade rating is typical for structured
finance assets.
•
Stage 3 assets are managed down to nil through
Risk and capital management continued
Credit risk – Banking activities continued
NatWest Markets N.V.
Annual Report and Accounts 2025
35
Heightened climate-related sectors
(1)
The below table shows all sectors with exposure
(2)
classified as being subject to heightened climate-related risk. Exposure is based on
loans, loan commitments and contingent obligations which are in scope for IFRS 9. The amounts reported in the table include all NWM
N.V. Group lending to customers including climate, sustainable and transition lending.
Total wholesale heightened climate-related risk exposure decreased by €0.4 billion during 2025, predominantly as a result of a
decrease of the heightened exposure to the Land transport and logistics sector by €0.7 billion. This was related to the following sub-
sectors not identified as heightened under the updated methodology in 2025: Land transport – rental, Other land transport and
Storage and warehousing. In addition, the heightened exposure to the Food and consumer sector decreased by €0.2 billion as this
sector was not identified as a heightened climate-related risk sector under the updated methodology in 2025. This was partly offset by
an increase of the heightened exposure to other sectors by €0.5 billion, primarily due to an increase of exposure to Oil and gas and
Industrials, which account for 1.7% and 3.0% of NWM N.V. Group total, respectively. Power utilities remains the largest heightened
climate risk sector in NWM N.V. Group credit portfolio, which accounts for 31.9% of NWM N.V. Group total in 2025 compared to 36.8%
reported as of 31 December 2024, hence its share in total portfolio decreased.
The exposures in this table were classified as heightened climate-related risk based on inherent risk, which reflects the risk associated
with a particular sub-sector in the external market.
31 December 2025
31 December 2024
Loans
Off-balance
sheet exposure
(2)
Total sector
exposure
Of which:
heightened
Heightened as
a % of NWM
N.V. Group
Total
Loans
Off-balance
sheet exposure
(2)
Total sector
exposure
Of which:
heightened
Heightened as a
% of NWM N.V.
Group Total
Sector/portfolio
€m
€m
€m
%
€m
€m
€m
€m
%
Power utilities
70
3,170
3,240
3,240
31.9%
94
3,080
3,174
3,174
36.8%
Land transport
and logistics
58
789
847
315
3.1%
95
881
976
977
11.3%
Automotive
-
652
652
652
6.4%
-
635
635
635
7.4%
Industrials
33
276
309
301
3.0%
29
196
225
210
2.4%
Building materials
-
196
196
196
1.9%
3
196
199
199
2.3%
Food and consumer
(3)
10
137
147
-
-
11
139
150
150
1.7%
Commercial real estate
19
100
119
119
1.2%
21
100
121
121
1.4%
Chemicals
6
109
115
114
1.1%
9
74
83
83
1.0%
Water and waste
5
77
82
82
0.8%
4
38
42
42
0.5%
Airlines and aerospace
-
165
165
-
-
1
37
38
8
0.1%
Leisure
17
32
49
25
0.2%
5
-
5
3
-
Construction
2
-
2
2
0.00
2
-
2
2
-
Shipping
2
-
2
-
-
2
-
2
2
-
Retail
88
226
314
2
-
13
280
293
2
-
Oil and gas
156
12
168
168
1.7%
-
-
-
-
-
Business services
-
-
-
-
-
50
-
50
-
-
Telecommunications
12
428
440
-
-
19
394
413
-
-
Health
(4)
85
36
121
15
0.1%
-
-
-
-
-
Wholesale heightened
climate-related
risk sectors
563
6,405
6,968
5,231
51.4%
358
6,050
6,408
5,608
65.1%
NWM N.V. Group Total
2,022
8,147
10,169
1,148
7,470
8,618
(1)
Heightened climate-related risk sector assessment seeks to identify sectors that are likely to see increased credit risks for NWM N.V. Group because of climate-related factors, over a 10-
to-15-year horizon. The assessment applies two lenses which consider transition (including liability risk) and physical risk. The heightened climate-related risk sector assessment within
this disclosure provides an aggregate view at industry level; within each sector there will be a diverse mix of counterparties, and as such climate-related risk will vary from customer to
customer.
(2)
Off-balance sheet includes loan commitments and contingent liabilities.
(3)
This sector was not identified as a heightened climate-related risk sector under the updated methodology in 2025.
(4)
This sector was identified as heightened climate-related risk sectors under the updated methodology in 2025 for the first time.
Risk and capital management continued
Credit risk – Banking activities continued
NatWest Markets N.V.
Annual Report and Accounts 2025
36
Forbearance
The table below shows forbearance, Heightened Monitoring and Risk of Credit Loss by sector. This table show current exposure but
reflects risk transfers where there is a guarantee by another customer.
Corporate and
other
Financial
institutions
Sovereign
Total
2025
€m
€m
€m
€m
Forbearance (flow)
-
-
-
-
Forbearance (stock)
-
-
-
-
Heightened Monitoring and Risk of Credit Loss
57
-
-
57
2024
Forbearance (flow)
-
-
-
-
Forbearance (stock)
-
-
-
-
Heightened Monitoring and Risk of Credit Loss
19
-
-
19
The flow statement that follows shows the main ECL and
related income statement movements. It also shows the
changes in ECL as well as the changes in related financial
assets used in determining ECL. Due to differences in scope,
exposures may differ from those reported in other tables,
principally in relation to exposures in Stage 1 and Stage 2.
These differences do not have a material ECL impact as they
relate to balances at central banks. Other points to note:
•
Financial assets include treasury liquidity portfolios,
comprising balances at central banks and debt securities,
as well as loans. Both modelled and non-modelled portfolios
are included.
•
Stage transfers (for example, exposures moving from Stage
1 into Stage 2) are a key feature of the ECL movements,
with the net re-measurement cost of transitioning to a
worse stage being a primary driver of income statement
charges. Similarly, there is an ECL benefit for accounts
improving stage.
•
Changes in risk parameters shows the reassessment of the
ECL within a given stage, including any ECL overlays and
residual income statement gains or losses at the point of
write-off or accounting write-down.
•
Amounts written-off represent the gross asset written-off
against accounts with ECL, including the net asset written-
off for any debt sale activity.
Stage 1
Stage 2
Stage 3
Total
Financial
assets
ECL
Financial
assets
ECL
Financial
assets
ECL
Financial
assets
ECL
NWM N.V. Group
€m
€m
€m
€m
€m
€m
€m
€m
At 1 January 2025
10,817
5
114
2
34
1
10,965
8
Currency translation and other adjustments
(38)
(1)
1
-
(1)
-
(38)
(1)
Transfers from Stage 1 to Stage 2
(214)
(1)
214
1
-
-
-
-
Transfers from Stage 2 to Stage 1
144
2
(144)
(2)
-
-
-
-
Net re-measurement of ECL on stage transfer
(1)
4
-
3
Changes in risk parameters
1
-
(1)
-
Other changes in net exposure
1,252
3
(28)
(1)
(32)
1
1,192
3
Income statement charges
3
2
-
5
Amounts written-off
-
-
-
-
(1)
(1)
(1)
(1)
At 31 December 2025
11,961
8
157
4
-
-
12,118
12
Net carrying amount
11,953
153
-
12,106
At 1 January 2024
13,731
8
143
2
-
-
13,874
10
2024 movements
(2,914)
(3)
(29)
-
-
-
(2,943)
(3)
At 31 December 2024
10,817
5
114
2
34
1
10,965
8
Net carrying amount
10,812
112
33
Risk and capital management continued
Credit risk – Banking activities continued
NatWest Markets N.V.
Annual Report and Accounts 2025
37
Stage 2 decomposition by a significant increase in credit risk trigger
The tables below show Stage 2 decomposition for the portfolio.
Corporate & other
Financial institutions
Total
Loans
ECL
Loans
ECL
Loans
ECL
2025
€m
€m
€m
€m
€m
€m
Non-Personal
Currently <=30 DPD
82
4
39
-
121
4
- PD deterioration
76
4
39
-
115
4
- Other driver (adverse credit, forbearance etc)
6
-
-
-
6
-
Total Stage 2
82
4
39
-
121
4
Corporate & other
Financial institutions
Total
Loans
ECL
Loans
ECL
Loans
ECL
2024
€m
€m
€m
€m
€m
€m
Non-Personal
Currently up-to-date
65
2
53
-
118
2
- PD deterioration
60
2
53
-
113
2
- Other driver (adverse credit, forbearance etc)
5
-
-
-
5
-
Total Stage 2
65
2
53
-
118
2
•
Active risk mitigation resulted in a limited increase in ECL overall with the majority of assets remaining in Stage 1. Movements
from Stage 1 into Stage 2 were largely offset by improvements in Stage 2 assets and corresponding movements from Stage 2
into Stage 1.
•
Stage 3 assets were fully cleared through disposals and were related to a single asset.
•
The days past due assets are technical in nature and are not expected to result in credit losses.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
38
Climate and nature risk
Definition
Climate and nature
risk
(1)
is the threat of financial loss or adverse
non-financial impacts associated with climate change and nature
loss respectively and the political,
economic and environmental
responses to it.
Sources of risk
Physical risks
may arise from climate events such as heatwaves,
droughts, floods, storms and nature-related events such as land
or air pollution. They can potentially result in financial losses,
impairing asset values and the creditworthiness of borrowers.
NWM N.V. Group could be exposed to physical risks directly by
the effects on its operational infrastructure and, indirectly, by the
impacts on the wider economy as well as on the property,
business interests and supply chains of its customers.
Transition risks
may arise from the process of adjustment
towards a low-carbon, nature restored economy. Changes in
policy, technology and sentiment could prompt reassessment of
customers’ financial risk and may lead to falls in the value of a
large range of assets. NWM N.V. Group could be exposed to
transition risks directly through the costs of adaptation of its
own operations as well as supply chain disruption leading to
financial impacts. Potential indirect effects include the impact on
the wider economy, including on customers, which may erode
NWM N.V. Group’s competitiveness and profitability, as well as
threaten reputational damage.
Liability risks
may arise should stakeholders consider NWM N.V.
Group’s climate and nature risk management practices and
disclosures insufficient, and responsible for or attributable to,
stakeholders’ losses.
On the other hand, liability risks may also arise where
some
jurisdictions
believe financial institutions have taken their
sustainability-related initiatives too far, with some imposing
sanctions in these circumstances. This includes diverging
regulatory and political expectations across jurisdictions in which
NWM N.V. Group operates.
Climate risk has been included in the NatWest Group risk
directory since 2021. In 2024, NatWest Group broadened the
definition to climate and nature risk and updated its internal risk
policy to reflect this. NatWest Group (including NWM N.V. Group)
are in the early stages of embedding nature into its risk
management processes.
Climate and nature risk is both a principal risk within NatWest
Group’s (including NWM N.V. Group’s) EWRMF and a cross-
cutting risk which impacts other principal risks. Accordingly,
NWM Group (including NWM N.V. Group) periodically refreshes
its assessment of the impact of climate-related risk factors to
other principal risks, where NWM N.V. Group’s exposure to a
principal risk could be taken outside of appetite due to climate-
related risk factors. In identifying climate-related risks and
opportunities to NWM N.V. Group, the period in which each is
likely to occur was assessed. Risks and opportunities
deemed
material to the five-year financial planning cycle were
viewed as short-term. Long-term was defined as beyond 15
years, while medium-term was defined as within the next five to
15 years.
The outcome of the latest assessments of the impacts of
climate-related risk factors to other principal risks is included in
the table that follows. All principal risks in the table were
identified as potentially the most impacted by climate risk, over
short,
medium
and long-term horizons, noting these risks could
amplify capital and liquidity risks themselves.
Risk type
Risks to NWM N.V. Group
Drivers
Identification,
assessment and
measurement
Credit risk
From the adverse impact on future credit worthiness of
customers due to climate change risk factors impacting asset
valuation, income and costs, for example, from water stress
events. Mitigants include the inclusion of climate considerations
in sector strategy within the various portfolios relevant to NWM
N.V. Group.
Physical: acute, chronic
Transition: government policy
and legislation, market,
technology, reputation
Scenario analysis
Portfolio level
assessments
Transaction level
assessments
Traded
market risk
Risk of losses on trading book positions driven by underlying
climate risk factors affecting macro or company specific market
prices. Mitigants include stress testing and portfolio reviews.
Physical: acute, chronic
Transition: government policy
and legislation, market,
technology, reputation
Scenario analysis
Operational
risk
Due to the increased likelihood and potential impact of business
disruption arising from new and changing policy standards.
Mitigants include resilience and external reporting governance.
Physical: acute, chronic
Transition: government policy
and legislation, market,
technology, reputation
Scenario analysis
Transaction level
assessments
Compliance
risk
NatWest Group (including NWM N.V. Group) is required to
comply with all applicable climate-related legal and regulatory
obligations. Mitigants include relevant horizon scanning.
Physical: acute, chronic
Transition: government policy
and legislation, market,
technology, reputation
Transaction level
assessments
Conduct risk
Due to poor customer outcomes arising from the impacts of
climate change. Mitigants include additional checks on
sustainability claims and applying product flaw controls.
Transition: government policy
and legislation, market,
technology, reputation
Liability: greenwashing
Scenario analysis
Transaction level
assessments
Reputational
risk
Arising from NatWest Group’s (including NWM N.V. Group’s)
actual or perceived contribution to climate change, or from the
adequacy of our actions in response. Mitigants include the
Environmental, Social & Ethical (ESE) risk framework
(2)
.
Transition: government policy
and legislation, market,
technology
Liability: greenwashing
Portfolio level
assessments
Transaction level
assessments
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
39
Climate and nature risk continued
Key developments in 2025
The effective management of climate and nature risk requires
the integration of climate and nature-related risk drivers into
strategic planning, transactions and decision-making. The
approach has evolved since 2021 alongside NatWest Group’s
(including NWM N.V. Group’s) ongoing, multi-year progressive
pathway to mature climate risk management capabilities. NWM
N.V. Group’s capability to manage climate risks is more mature
than its capability to manage nature-related risks.
•
NatWest Group (including NWM N.V. Group) continued to
enhance its in-house climate risk modelling capabilities,
supporting the ongoing integration of climate risk within its
capital adequacy (ICAAP), impairment (IFRS 9) and risk
management processes. Insights from risk processes have
been shared with sector and front-line teams to support the
financial budget and climate transition plan processes.
In
particular, internal
physical risk modelling capabilities have
been developed during 2025 with further enhancements to
come in 2026.
•
NatWest Group (including NWM N.V. Group) continued its
roll-out of Climate Decisioning Framework (CDF) tools. These
comprise climate risk scorecards and climate transition plan
assessment tools. The roll-out continues on a test-and-learn
basis and initial use cases were introduced where we identify
higher-risk transactions for enhanced oversight or escalated
approval processes.
•
Building on first-generation testing of the Environmental
Decisioning Framework (EDF) in 2024, the 2025 testing
scope was extended to include large corporate customers
across the EU and UK, supporting further refinement of the
framework.
•
NWM N.V. Group completed its 2025 Climate and
Environmental (C&E) risk materiality assessment, applying a
structured framework across sector, counterparty, and
sovereign exposures.
•
In 2025 NWM N.V. Group continued to work on embedding
environmental risks into its stress testing framework. A
water scarcity stress test was conducted to assess its credit
exposure to sectors identified as water-vulnerable.
Governance
Risk governance for climate
and
nature risk is in line with the
approach outlined in the Risk management framework section.
•
Board responsibilities –
The NWM N.V. Supervisory Board
oversees the delivery against the agreed strategy and
objectives of NWM N.V. Group, including tracking progress
against NatWest Group’s ambitions and targets, and
approves the risk appetite of NWM N.V. Group.
•
Risk oversight – The NWM N.V. Board Risk Committee
oversees NWM N.V. Group’s risk management, including its
progress towards meeting legal and regulatory
expectations over climate and environmental matters. The
NWM N.V. Managing Board and broader governance
framework support the assessment and management of
climate and environmental risks and opportunities across
NWM N.V. Group.
Risk appetite
Risk appetite for climate
and
nature risk is in line with the
approach outlined in the Risk management framework section
on pages 14 to 15.
Work continued in 2025 to mature NWM N.V. Group’s climate-
related risk management capabilities, while building out nature-
related awareness. NWM N.V. Group has an operational limit
and a suite of key risk indicators. These measures provide
management with information, including balance sheet exposure
to heightened climate risk sectors, financed and
facilitated
emissions, and liquidity exposure to corporate sectors which are
vulnerable to environmental and climate risk factors.
Identification, assessment and measurement
NatWest Group (including NWM N.V. Group) continues to
enhance its processes to effectively measure the potential size
and scope of climate-related risks, through the three
approaches detailed below. The approach to nature-related risks
is not as mature as the approach to climate-related risks. As
methodologies, data and regulatory expectations for
nature-related risks continue to evolve, management currently
treats nature-related assessments as exploratory and
directional, and they do not yet form a direct input into capital
allocation or risk appetite calibration.
Scenario analysis
NatWest Group (including NWM N.V. Group) focused on
continuing to develop the capabilities to use scenario analysis to
identify the most material climate risks for its customers, seeking
to harness insights to inform risk management practices and
support decision making.
Scenario analysis allows NatWest Group (including NWM N.V.
Group) to test a range of possible future climate pathways and
understand the nature and magnitude of the risks they present.
The purpose of scenario analysis is not to forecast the future but
to understand and prepare to manage risks that could arise.
NatWest Group (including NWM N.V. Group) recognises a
number of potential key use cases for climate scenario analysis,
including, but not restricted to, the following:
•
Regulatory stress testing requirements.
•
Portfolio management.
•
Strategic decision-making, capital adequacy and
provisioning.
Specific internal-run exercises in 2025 included:
•
A credit-risk focused exercise covering both physical and
transition risk scenarios for the Commercial & Institutional
portfolio.
•
A non-financial risk scenario for climate focused on external
communications which could omit or contain incorrect
information, resulting in an inaccurate representation of
NatWest Group (including NWM N.V. Group) activities.
•
A traded market risk scenario where stress testing applies
delayed transition assumptions to shock credit spreads with
macroeconomic overlays, impacting the trading book and
monitored on a quarterly basis.
•
An environmental water stress scenario to assess credit
risk impacts under a severe drought in Western Europe,
focusing on water-vulnerable sectors. The scenario was
selected based on materiality and data availability. The
analysis leveraged internal data and external benchmarks,
supported by expert feedback to refine assumptions and
improve accuracy.
Credit and non-financial risk scenario analysis exercises for
climate were also run in 2024.
There are various challenges with quantitative climate scenario
analysis. These risks and uncertainties, coupled with significantly
long timeframes, make the outputs of climate-related risk
modelling with respect to the potential use cases identified
inherently more uncertain than outputs modelled for traditional
financial planning cycles based on historical financial information.
Recognising these challenges, qualitative work focused on the
cascading and compounding consequences of climate and
nature breakdown (for example, lower growth, higher inflation,
societal and political uncertainty) continues to be developed and
assessed under the emerging threats framework.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
40
Climate and nature risk continued
Key limitations of the water stress scenario include limited
availability of water consumption data, challenges with capturing
corporate responses to water stress – such as facility
drawdowns – as well as compounding environmental factors.
While the approach was tactical and limited to a single time
horizon, the exercise provided valuable insights that will inform
methodological enhancements and support integration into
broader risk management processes.
Portfolio level assessment
NatWest Group (including NWM N.V. Group) uses a number of
tools to undertake portfolio level assessments including stress
analysis in operational limits in credit risk, stress analysis in
market risk and heightened climate-related risk sector
assessment in credit risk.
The latter refreshed annually seeks to
identify sectors that are likely to see increased credit risks for
NWM N.V. Group because of climate-related factors, over a 10
to 15-year horizon.
NWM N.V. Group completed its 2025 C&E risk materiality
assessment, applying a structured framework across sector,
counterparty, and sovereign exposures. The assessment
integrated both physical and transition risk drivers and
confirmed that C&E risks remain relevant for credit risk
management, with high-materiality sectors identified for further
targeted analysis.
Liquidity risk stress testing
Within NWM N.V. Group climate and environmental risk drivers
are included in the 2025 Internal Liquidity Adequacy Assessment
Process (ILAAP), including an internal liquidity scenario in the
form of major environmental disruption in the UK and northern
Europe. For 2025, the outputs from this scenario were not the
most severe within the suite of scenarios, so although included in
the framework, did not directly impact the internal stress testing
results. Two climate-related internal reverse stress testing
scenarios are also included in the ILAAP, one covering physical
risks arising from flooding in the Netherlands and one covering
transition risks arising from the earlier than planned adoption of
stricter emission standards.
Transaction level assessment
Assessments are undertaken to consider any potential
greenwashing risk within NWM Group’s (including NWM N.V.
Group’s) marketing and communications.
The NatWest Group Supplier Code of Best Practice encourages
NatWest Group (including NWM N.V. Group’s) suppliers to
undertake sustainability assessments to evaluate supplier
sustainability performance.
NatWest Group (including NWM N.V. Group) continues to use its
CDF tools to engage with its customers to understand their
climate transition journeys and how they are managing the
climate-related risk for their business. In 2025, NatWest Group
(including NWM N.V. Group) continued to roll-out CDF on a test-
and-learn basis adding coverage of insurance and other financial
institutions’ customers.
Enhancements were also made to the large corporates
assessment to increase the granularity of sector and country-
specific questions, for example, questions which assess how
much of NatWest Group’s (including NWM N.V. Group’s)
customer’s business activities are EU taxonomy aligned. This
phased test-and-learn approach continues to build internal
capability among first and second-line colleagues, and foster a
culture where climate risk is embedded into the existing credit
journey.
Recognising the complexity of the energy transition, NatWest
Group (including NWM N.V. Group) conducted an energy system
review during 2025 to ensure the strategy reflects the
interconnected risks and opportunities across the energy value
chain as the economy transitions toward net zero. The energy
system review considered the systemic nature of the energy
transition which anticipates further growth in renewables, the
important yet declining role of oil and gas, significant
infrastructure investment and demand-side electrification.
Reflecting the outcome of the energy system review, NatWest
Group (including NWM N.V. Group) has established a new E&S
Energy Supply Sector Risk Acceptance Criteria.
Within NWM N.V. Group, the EDF enables engagement with
customers on physical and transition environmental-related
(including nature-related) risks across the large corporate
portfolio. Like CDF, EDF enables structured conversations with
customers using quantitative information. Following first-
generation testing on a small number of counterparties in 2024,
testing scope was expanded in 2025 to include large corporate
customers (both in the EU and UK) to inform further refinement
of the framework.
Client onboarding process in NWM N.V. Group incorporates a
C&E assessment, addressing risks not covered by existing
frameworks such as CDF, EDF, or Environmental, Social and
Ethical (ESE) risk framework. This assessment is performed at
the outset of the client relationship to inform counterparty risk
classification and is revisited as needed based on that
classification.
Mitigation
NatWest Group (including NWM N.V. Group) manages and
mitigates climate-related risk through:
•
Top-down portfolio assessments, including incorporating
climate factors in the overall sector strategy, updating the
environmental, social and ethical risk acceptance criteria in
response to potential climate-related risks and applying
climate-enhanced transaction acceptance standards.
•
Bottom-up customer assessments, including the use of the
CDF tool to provide a consistent and structured approach
for understanding customer-specific exposure to climate-
related risks and identify higher risk transactions for
enhanced oversight or escalated approval processes.
Impact of NWM N.V. Group business activities on
climate change
NWM N.V. Group identified emissions resulting from its business
activities to include:
•
Emissions attributable to the trading book (Scope 3).
•
Emissions related to financing activities – financed
(3)
and
facilitated emissions (Scope 3).
•
Emissions from NWM N.V. Group’s own operations, which is
reported at the consolidated NatWest Group level (Scope 1,
2 and 3)
(3)
.
Trading book
At present, the scale of the carbon emissions associated with
the trading book is uncertain given that trading book positions
typically have shorter holding horizons and are more dynamic
than those in the banking book. This continues to be an
industry-wide challenge with no agreed approach on
quantification of trading book related emissions.
Financing activities
Financed emissions – lending and investments
(3)
Given the smaller size of the banking book relative to NWM N.V.
Group’s underwriting activities and trading book, financed
emissions currently play a limited role within NWM N.V. Group.
NatWest Group reports financed emissions at a consolidated
group level including NWM N.V. Group.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
41
Climate and nature risk continued
Estimate of facilitated emissions on bond underwriting and syndicated lending
Banks play a key role as facilitators between issuers and investors, and borrowers and lenders, by offering and conducting financial
intermediation activities, critical to the functioning of capital markets.
Facilitation activities differ from on-balance sheet lending financed emissions in two respects. They are off-balance sheet
(representing
services rather than financing) and they can take the form of a flow activity (temporary association with transactions)
rather than a stock activity (recorded on the balance sheet). NWM N.V. Group calculates facilitated emissions based on the annual
transaction volume. This reflects the transactional nature of capital markets activities and the period in which banks generate revenue
from them.
Facilitated emissions arising from capital markets activity, specifically bond underwriting and syndicated lending, are inherently volatile,
being dependent on client mandates and deal flow, which can fluctuate significantly year on year. This limits the comparability of
emissions over time and poses challenges for setting consistent, forward-looking targets. While NWM N.V. Group acknowledges the
importance of these emissions in understanding our climate-related risks and opportunities, NWM N.V. Group has not set quantitative
targets for this activity. The
focus remains on succeeding with customers and supporting the real economy's transition towards net
zero through the launch of the climate and transition finance framework
(8)
. Additionally, NWM Group (including NWM N.V. Group) is
aiming to improve its data to enable more robust measurement and disclosure of facilitated emissions in line with evolving
methodologies and applicable sustainability disclosure standards.
NWM Group (including NWM N.V. Group) followed the PCAF Part B Global Greenhouse Gas Accounting and Reporting Standard for
Facilitated Emissions
to define an issuer as an organisation that issues debt or equity capital markets instruments
(4,7,10)
.
We also
included green bond, green loan syndication
(6,8)
and the role of co-manager
(9)
in the estimation of facilitated emissions.
NWM N.V. Group absolute estimated customer Scope 1 and Scope 2 facilitated emissions for capital markets activities includes:
•
Capital markets bond underwriting activities of €12.9 billion. This constituted 40% of NWM N.V. Group’s capital markets bond
underwriting. Securitisations, Sovereigns, Supranationals and Agencies, are out of scope for PCAF
(4,5)
.
•
Capital markets syndicated lending activities
(10,11)
of €0.2 billion.
NWM N.V. Group absolute Scope 1 and Scope 2 facilitated emissions weighted at 33%, were 0.18 MtCO2e for 2025 (2024: 0.48
MtCO2e).
It is important to note that the absolute amounts presented are estimates and may be subject to change given shifting baselines year-
on-year
and evolving PCAF guidance
(13)
.
The table below shows NWM N.V. Group’s estimated facilitated emissions from bond underwriting and syndicated lending activities in
2025 and 2024, as attributed to NWM N.V. Group and split between conventional and green issuance or syndicated lending, where
applicable
(6,8,14)
: Estimated facilitated emissions, captured within Financial Institutions, can include emissions associated with underlying
company activity.
•
For power utilities, NWM N.V. Group attributable bond underwriting and syndicated lending decreased by 20% between 2024 and
2025. Of the estimated facilitated emissions arising from attributable bond underwriting and syndicated lending, 89% was green
(6,8)
.
•
Total attributable bond underwriting and syndicated lending for building materials increased in 2025, constituting 6% of estimated
facilitated emissions.
•
Estimated facilitated emissions for airlines and aerospace decreased between 2024 and 2025 by 100%.
•
Oil and gas represented 1% of the total NWM N.V. Group attributable bond underwriting and syndicated lending and constitutes 6%
of the facilitated emissions in 2025.
2025
2024
Facilitated emissions from bond
underwriting and syndicated lending
Attributable
(33% weighting) MtCO2e
Attributable
bond underwriting and
Sector %
Green %
bond underwriting and
Facilitated
syndicated lending
of total
of sector
PCAF data
syndicated lending
emissions
Sector
€m
%
MtCO2e
emissions
emissions
quality score
€m
%
MtCO2e
Power utilities
2,334
18%
0.13
72%
89%
2.1
3,010
15%
0.35
Building materials
185
2%
0.01
6%
-
2.0
0
-
-
Airlines and aerospace
277
2%
-
-
-
3.4
580
3%
0.05
Chemicals
100
1%
-
-
-
2.0
422
2%
0.01
Leisure
99
1%
-
-
-
2.0
200
1%
-
Oil and gas
150
1%
0.01
6%
-
2.0
-
-
-
Land transport and logistics
640
5%
0.01
6%
11%
2.3
605
3%
0.02
Retail
284
2%
-
-
-
2.0
1,865
10%
0.01
Water and waste
114
1%
-
-
-
2.0
-
-
-
Manufacturing
83
1%
-
-
-
2.0
345
2%
-
Financial institutions
6,998
53%
-
-
-
2.6
9,422
48%
-
Automotive
638
5%
0.01
5%
-
2.0
1,093
6%
-
Commercial real estate
-
-
-
-
-
-
230
1%
-
Other
(12)
1,153
8%
0.01
5%
9%
3.1
1,835
9%
0.04
Total
13,055
100%
0.18
100%
2.5
19,607
100%
0.48
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
42
Climate and nature risk continued
NWM N.V. Group uses NWM Group’s methodology for estimation:
•
NWM Group shows the breakdown of conventional versus green bonds and loans to highlight the expected difference of facilitated
emissions associated with the conventional versus green activities but does not distinguish these from conventional transactions or
apply lower emissions
(6,8)
.
•
For syndicated lending, NWM Group included the roles of active and passive underwriting and active best efforts, the role of
coordination is not in scope by PCAF
(4,10,11)
.
•
In 2025, NWM Group continued to review the methodology for estimating facilitated emissions and updated the scope for
syndicated lending to exclude passive best-efforts roles, ensuring only active facilitation is reflected. This change represents scope
refinements rather than changes in underlying performance or the source of data.
•
In line with the PCAF Facilitated Emissions Standard
(4)
, NWM Group allocated transactions based on actual volume facilitated where
available; for remaining positions transaction volume was apportioned equally among bookrunners/arrangers.
•
In line with the PCAF published standard
(4)
, to estimate greenhouse gas emissions, NWM Group sourced customer-level emissions
data, where possible. If customer-level data was unavailable, emissions estimates (PCAF 4) or emission sector averages (PCAF 5)
were used for emission intensities from 2024 and applied against 2025 volumes
(13)
.
•
PCAF recommends that Scope 3 emissions for all sectors are disclosed in climate reporting from the beginning of 2025. NWM
Group continues to review Scope 3 estimation methodologies and the availability of appropriate data for inclusion in future
reporting.
•
PCAF scores are categorised between 1-5. PCAF scores of 1 or 2 are typically considered to have a higher degree of confidence
in the estimation of facilitated emissions, as these are directly sourced from reports published by the customer. A PCAF score of 5
is typically considered to have a lower degree of confidence, as these are estimated by the reporting entity. The PCAF data quality
score is based on the PCAF approach taken to estimate Scope 1 and Scope 2 emissions within a given sector. Where estimation
methodologies differ between Scope 1 and Scope 2, NWM Group use the least favourable of a customers’ PCAF scores in the
weighted average calculation.
(1)
Nature elements apply to EU legal entities subject to ECB prudential regulation, i.e. NWM N.V. Group and will underpin the maturing approach to nature-related risks beyond climate
change. NWM N.V. Group use the terms ‘nature’ and ‘environment’ interchangeably in recognition of both the NatWest Group climate and nature policy and also ECB terminology.
(2)
From 1 January 2026, NatWest Group updated the name of the ESE Risk Framework to the Environmental & Social Risk Framework. This change better reflects the framework's
underlying methodology which focuses on a risk-based approach aligned to organisational risk appetite, rather than values-based judgements.
(3)
NatWest Group reports emissions at a consolidated group level. NWM Group own operations and financed emissions are therefore subsumed into NatWest Group’s estimation of own
operational footprint and estimated financed emissions for the consolidated group.
(4)
https://carbonaccountingfinancials.com/files/PCAF-PartB-Facilitated-Emissions-Standard-Dec2023.pdf
.
(5)
NatWest Group’s own bond issuances are not included within estimates of facilitated emissions.
(6)
Green bonds and loans are excluded in PCAF’s facilitated emissions guidance
(4)
. While these instruments are expected to have lower emissions intensity, there is currently no agreed
method to quantify their emissions. NWM Group treat Sustainability linked and sustainable bond and loan activities as conventional for the purpose of estimating and reporting on
facilitated emissions
(7)
The PCAF standard
(4)
does not currently outline an estimation approach for short-term assets (such as commercial papers), as such these products are currently excluded from the
facilitated emissions estimation.
(8)
NatWest Group 2024 Climate and sustainable funding and financing inclusion criteria was used to determine the assets, activities and companies eligible for inclusion up to 30 June 2025.
From 1 July 2025, the NatWest Group climate and transition finance framework was used. Both frameworks are available at Natwestgroup.com
(9)
Co-managers are not captured by the PCAF standard. Our inclusion aligns with NatWest Group’s climate and sustainable funding and financing inclusion criteria
(8)
, and climate and
transition finance framework
(8)
, as well as the PCAF Standard's guidance relating to greenhouse gas (GHG) accounting and its recommendations to adopt a ‘follow the money' approach.
(10)
A syndicated loan transaction is defined as a loan made available by two or more providers under a common loan agreement and ranking credit is assigned upon signature of the loan
documentation. Where a financial institution provides an underwriting facility that puts the institution’s capital at risk, this should be treated separately from the role they provide in
arranging and facilitating an issuance
(4)
.
(11)
The syndicated loan market is a private market with no requirement for banks to report collectively into third-party league tables. NWM Group identified relevant loan markets volumes
based upon an internal scope and methodology with an aim to align to guidance from PCAF issued in December 2024
(4)
. The numbers reported are therefore presented on a best
endeavours basis and are subject to change as guidance develops.
(12)
Other consists of technology, media & telecommunications of €755 million and emissions of 0.00 MtCO2e (2024 €797 million and 0.00 MtCO2e respectively).
(13)
NWM Group aims to estimate facilitated emissions using the latest data available, recognising there may be a lag between the availability of emissions data and the date of record for
reporting. As a consequence of this lag, more recent changes in a counterparty’s activities may not be reflected in the estimate of facilitated emissions. NWM Group continues to refine
its estimates as NWM Group enhances its understanding, calculation methodologies and data. Also, methodologies to calculate emissions for certain sectors are still under development.
Based on these limitations, NWM Group expects its estimates to change as NWM Group improves the granularity and coverage of customer climate data and develop methodologies
further.
(14)
The table should be read in conjunction with the NWM Group Climate and sustainability risk factors included on pages 143 to 146 and Forward-looking statements on page 147.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
43
Operational risk
Definition
Operational risk is the risk of loss resulting from inadequate or
failed internal processes, people and systems, or external
events. It arises from day-to-day operations and is relevant to
every aspect of the business.
Sources of risk
Operational risk may arise from a failure to manage operations,
systems, processes, transactions, and assets appropriately. This
includes human error, an inability to deliver change adequately
or on time, the non-availability of technology services, or the loss
of customer data. It also includes systems failure, theft of
NatWest Group property, information loss, the impact of natural
or man-made disasters and the threat of cyberattacks.
Operational risk can also arise from a failure to account for
changes in law or regulations or to take appropriate measures
to protect assets.
Key developments in 2025
•
The enhanced risk and control self-assessment approach
was refined further with a focus on material operational risks
and controls across the key end-to-end processes.
•
The use of automated data-led insights was embedded to
oversee the operational risk profile and manage it within
appetite.
•
Improvements to technology end of life risk management
were implemented to mitigate associated technology and
cyber risks.
•
AI tools have been introduced to support the articulation and
adequacy of controls including generative AI chat bots to
support the embedding of frameworks and to help with
horizon scanning.
•
Compliance with UK and EU operational resilience regulatory
requirements continues to be maintained, with further
embedding and improvements of EU Digital Operational
Resilience Act requirements to support oversight on
outsourced services and uplifting of third party contracts.
•
Embedding and enhancement of operational resilience with
increasingly severe, complex, and prolonged scenario tests
for cyber, third-party, and significant IT failure risks as a
benefit and outcome of the effective risk management of a
wide range of interconnected operational risks.
•
Threat horizon scanning and vulnerability management
processes were enhanced to support risk identification,
scenario testing and the prioritisation of risk mitigation
activities.
Governance
Risk governance for operational risk is in line with the approach
outlined in the Risk management framework section and are
consistent with achieving safety, soundness and sustainable risk
outcomes. Aligned to this, a strong operational risk management
function is vital to support NWM N.V. Group ’s ambitions to
serve its customers better. Improved management of
operational risk against defined risk appetite is vital for stability
and reputational integrity.
To support ongoing oversight of the management of the
operational risk profile, a NatWest Group Executive Steering
Committee is in place. This forum ensures all material
operational risks are monitored and managed within appetite,
across NWM N.V. Group.
Risk appetite
Risk appetite for operational risk is in line with the approach
outlined in the Risk management framework section.
Measurement and monitoring
Measurement and monitoring for operational risk is in line with
the approach outlined in the Risk management framework
section.
Mitigation
Mitigation for operational risk is in line with the approach
outlined in the Risk management framework section.
Operational risks are mitigated by applying preventative and
detective controls which are assessed on adequacy and
effectiveness through risk and control self-assessment process
on a regular basis to determine risk exposure. Mitigation is
prioritized using risk-based approach considering risk appetite.
Operational resilience and cybersecurity
NatWest Group maintains a robust approach to operational
resilience through comprehensive, Group-wide processes. These
include regular scenario tests that simulate increasingly severe
and sophisticated disruption events. In 2025, as part of NatWest
Group’s operational resilience strategy, severe but plausible
disruption scenario tests were undertaken and encompassed
cyber threats, third-party risks, and significant IT failures
confirming the preparedness and effectiveness of NatWest
Group’s operational resilience strategies, and plans including
third party arrangements in the event of severe but plausible
disruptions.
This rigorous approach was underpinned with the enhancement,
ongoing monitoring, and transparent reporting of key risk
indicators and performance metrics for important business
services. In Q1 2025, the NatWest Group operational resilience
annual self-assessment confirmed its approach to enhancing and
strengthening operational resilience to meet the UK regulatory
requirements for operational resilience, within defined
timeframes. NWM N.V. Group continue to embed EU
requirements, with its annual self-assessment scheduled for
2026.
By meeting the 2025 compliance deadlines for these critical
regulatory frameworks, NWM N.V. Group demonstrated the
strength and reliability of its systems and controls. This enables
effective risk management, minimises potential disruptions, and
safeguards both customers and the wider financial system.
These efforts reinforce NWM N.V. Group commitment to building
trust and stability within financial services.
NWM N.V. Group recognises and continues to prioritise
operational resilience as an outcome and benefit of the effective
management of a range of interconnected operational risks,
ensuring NMW N.V. Group continues to meet regulatory
expectations for its operational resilience with continued
involvement in a number of industry-wide operational resilience
forums.
This engagement provides valuable cross-sector perspective on
the evolving operational resilience risk landscape and supports
NatWest Group’s ability to adapt to ongoing innovation and
change, both internally and across the financial services sector.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
44
Operational risk continued
NatWest Group operates layered security controls and its
architecture is designed to provide inherent protection against
threats.
This approach avoids reliance on any one type or
method of security control.
Minimum security control
requirements are set out in key risk policies, standards,
processes and procedures.
Throughout 2025, NatWest Group continued to monitor and
manage the threat landscape focusing on:
•
Initial access brokers (cyber criminals who specialise in
breaching organisations then selling the access to other
threat actors), ransomware gangs and, in light of ongoing
geopolitical tensions, nation states.
•
Innovations in technology, assessing the inherent risk and
developing appropriate responses to manage any
associated risks.
Artificial Intelligence, Quantum Computing
and Cloud Adoption have been areas of focus in 2025.
As cyberattacks evolve, NatWest Group continues to invest in
additional capability designed to defend against emerging risks.
NWM N.V. Group set out its appetite in respect of resilience
through the Business Resilience, IT Resilience and Incident
Management policy standards and associated controls. These
policy standards have now been replaced by a single
Operational Resilience Risk Standard, which details the current
control requirements. These control requirements support
compliance with regulatory policy and support the ongoing
provision of the services to our customers during business as
usual and at the time of a disruptive event.
Cybersecurity risk management processes
Our cybersecurity risk management forms an integral part of
NatWest Group’s overall EWRMF that is designed around a three
lines of defence model. Specifically, management of
cybersecurity risk is a subset of the NatWest Group’s wider
operational risk management. To support our cybersecurity risk
management, NatWest Group has a cybersecurity Board level
risk appetite measure and policies. These policies are reviewed
at least annually and benchmarked against industry best
practice standards, including the “Information Security Forum:
Standard Of Good Practice” (ISF: SOGP), and relevant
publications by competent authorities such as the National
Cyber Security Centre, to help us identify and remediate any
gaps in our controls and procedures. In addition, NWM N.V.
Group has a number of legal entity specific cybersecurity
operational limits which inform internal risk monitoring.
Our cybersecurity risk management framework is designed to
mitigate the impact of cybersecurity threats and incidents. The
framework also includes a structured approach for identifying
and managing both internal cybersecurity incidents and external
incidents impacting our third-party suppliers.
Cybersecurity threats for 2025
NatWest Group is continuously exposed to cybersecurity threats
across its business and supply chain, which are closely
monitored by NatWest Group. In the year ended 31 December
2025, we did not identify any cybersecurity threats that have
materially affected or are reasonably likely to materially affect
NatWest Group. However, given the nature of cybersecurity
threats, we cannot eliminate all risks from cybersecurity threats,
or provide assurances that we have not experienced an
undetected cybersecurity incident. For more information about
these risks, please see “Risk Factors – NatWest Group is subject
to increasingly sophisticated and frequent cyberattacks.” in this
annual report.
Board cybersecurity risk oversight
The NatWest Group Board ensures there is a framework of
prudent and effective controls which enables risks – including
information and cybersecurity risk – to be assessed and
managed.
NatWest Group’s first line of defence is responsible for setting
NatWest Group’s information and cybersecurity risk
management strategy, including: delivering effective and efficient
cybersecurity products, policies and services and identifying,
considering and assessing material cybersecurity threats on an
ongoing basis.
Event and loss data management
The operational risk event and loss data management process
ensures NWM N.V. Group captures and records operational risk
financial and non-financial impacts that meet defined criteria.
Loss data is used for regulatory and industry reporting and is
included in capital modelling when calculating economic capital
for operational risk. The most serious events are escalated in a
simple, standardised process to all senior management, by way
of an early event escalation process. NWM N.V. Group has not
experienced a cybersecurity breach or associated material loss
in the last three years.
All financial impacts and recoveries associated with an
operational risk event are reported against the date they were
recorded in NatWest Group’s financial accounts. A single event
can result in multiple losses (or recoveries) that may take time to
crystallise. Losses and recoveries with a financial accounting
date in 2025 may relate to events that occurred, or were
identified in, prior years. NatWest Group purchases insurance,
against specific losses, including cyberattacks, and to comply
with statutory or contractual requirements.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
45
Compliance and conduct risk
Definition
Compliance risk is the risk that NWM N.V. Group fails to observe
the letter and spirit of all relevant laws, codes, rules, regulations
and standards of good market practice.
Conduct risk is the risk of inappropriate behaviour towards
customers, or in the markets in which NWM N.V. Group
operates, which leads to poor or inappropriate customer
outcomes, and/or undermines market integrity.
The consequences of failing to meet compliance and/or conduct
responsibilities can be significant and could result, for example,
in legal action, regulatory enforcement, material financial loss
and/or reputational damage.
Sources of risk
Compliance and conduct risk exist across all stages of NWM
N.V. Group’s relationships with its customers and arise from a
variety of activities including product design, marketing and
sales, complaint handling, and handling of confidential and inside
information.
Key developments in 2025
•
As part of the Non-Financial Risk Enhancement
Programme, NatWest Group reviewed the compliance and
conduct framework against the Operational Riskdata
eXchange Association (ORX) regulatory compliance and
conduct risk taxonomy. This industry-standard taxonomy
informed proposals for the annual risk directory refresh,
including new level 2 risks and a consolidation of conduct
and regulatory compliance risks into a single ‘regulatory
compliance risk’ from 2026. These changes will enhance
risk coverage, strengthen integration with the EWRMF, and
align more closely with industry practice.
•
NWM N.V. Group is also evaluating alternative rules
mapping approaches, including a regulatory traceability
model. This will simplify governance, reduce complexity, and
improve consistency, while ensuring our framework remains
resilient and future-ready.
•
On 4 September 2025, the U.S. Court of Appeal approved
an amendment of the plea agreement and formally
terminated the Monitorship (extended oversight) of NatWest
Markets Plc. This is a result of the notable progress made in
strengthening our global compliance programme,
improvements in internal controls and remediation, and the
status of the implementation of the Monitor’s
recommendations. NWM Plc’s obligations under the plea
agreement and probation have been extended until
December 2026. Going forward, NWM Plc will report
progress on the compliance programme to the US
Department of Justice (DoJ) directly.
Governance
NWM N.V. defines appropriate standards of compliance and
conduct and ensures adherence to those standards through its
risk management framework.
To support ongoing oversight of the management of the
compliance and conduct risk profile there are a number of
committees in place across both the first and second line of
defence. Relevant compliance and conduct matters that have an
impact on NWM N.V. Group are escalated to the Management
Risk Committee and to the Managing Board.
Risk appetite
Risk appetite for compliance and conduct risk is in line with the
approach outlined in the Risk management framework section.
Measurement and monitoring
Measurement and monitoring for compliance and conduct risks
are in line with the approach outlined in the Risk management
framework section.
Mitigation
Mitigation for compliance and conduct risk is in line with the
approach outlined in the Risk management framework section.
Activity to mitigate the most material compliance and conduct
risks is carried out across NWM N.V. Group with specific areas
of focus in the customer-facing businesses and legal entities.
Examples of mitigation include consideration of customer needs
in business and product planning, targeted training, conflicts of
interest management, market conduct surveillance, complaints
management, mapping of priority regulatory requirements and
independent monitoring activity. Internal policies help support a
strong customer focus across NWM N.V. Group.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
46
Financial crime risk
Definition
Financial crime risk is the risk that NWM
N.V. Group’s products,
services, employees and/or third parties are intentionally or
unintentionally used to facilitate financial crime in the form of
money laundering, terrorist financing, bribery and corruption,
sanctions and tax evasion, as well as external or internal fraud.
Sources of risk
Financial crime risk may be present if NWM N.V. Group’s
customers, employees or third parties undertake or facilitate
financial crime, or if NWM N.V. Group’s products or services are
used intentionally or unintentionally
to facilitate such crime.
Financial crime risk is an inherent risk across all lines of business.
Key developments in 2025
•
During 2025, a self-identified data issue impacting the
Transaction Monitoring control continued to be assessed
through four workstreams, that work continues to be
conducted and will continue into 2026. Regulatory
authorities, including the FCA and DNB have been advised
of the issue and receive regular update reports.
•
The European Union is advancing toward a harmonised
framework for anti-money laundering and countering the
financing of terrorism (AML/CFT) through the establishment
of a Single Rulebook. This legislative package aims to
eliminate fragmentation across Member States, enhance
supervisory consistency, and strengthen the EU’s resilience
against financial crime. NWM N.V. Group is working on
reviewing the regulatory changes and assessing how to
implement into the policy framework.
Governance
Risk governance for financial crime risk is in line with the
approach outlined in the Risk management framework section.
NWM N.V. Group is represented on the Financial Crime Risk
Committee (FCRC), which is chaired by NWM Global Head of
Financial Crime and is NWM Group’s principal financial crime risk
management forum. The committee reviews and, where
appropriate, escalates material financial crime risks and issues
across NWM Group to the NWM Executive Risk Committee and
NWM Board Risk Committee.
Additionally, NWM Group – including NWM N.V. Group – is
represented on NatWest Group’s Financial Crime Executive
Steering Group, which oversees financial crime risk
management, operational performance, and transformation
matters across NatWest Group. Financial Crime Risk is a fixed
agenda item for the NWM N.V. Group Management Risk
Committee and is regularly discussed by the NWM N.V. Group
Managing Board, Board Risk Committee and Supervisory Board.
Risk appetite
Risk appetite for financial crime risk is in line with the approach
outlined in the Risk management framework section.
There is no appetite to operate in an environment where
systems and controls do not enable the effective identification,
assessment, monitoring, management and mitigation of financial
crime risk. NWM N.V. Group’s subsidiary legal entities systems
and controls must be comprehensive and proportionate to the
nature, scale and complexity of its businesses
Measurement and monitoring
Measurement and monitoring for financial crime risk is in line
with the approach outlined in the Risk management framework
section.
Financial crime risks are identified and reported through
continuous risk management and regular reporting to the
Management Risk Committee and the Managing Board and to
NatWest Group’s senior risk committees and at Board level.
Quantitative and qualitative data is reviewed and assessed to
measure whether financial crime risk is within NWM N.V.
Group’s risk appetite.
Mitigation
Mitigation for financial crime risk is in line with the approach
outlined in the Risk management framework section.
Through the financial crime framework, relevant policies,
systems, processes and controls are used to mitigate and
manage financial crime risk. This includes the use of dedicated
screening and monitoring systems and controls to identify
people, organisations, transactions and behaviours that may
require further investigation or other actions. Centralised
expertise within NatWest Group is available to detect and
disrupt threats to NWM N.V. Group and its customers.
Intelligence is shared with law enforcement, regulators and
government bodies to strengthen national and international
defences against those who would misuse the financial system
for criminal motives.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
47
Model risk
Definition
Model risk is the potential for adverse consequences from model
errors or the inappropriate use of modelled outputs to inform
business decisions. A model is defined as a quantitative method,
system, or approach that applies statistical, economic, financial,
accounting, mathematical or data science theories, techniques
and assumptions to process input data into estimates.
Sources of risk
NWM N.V. Group uses a variety of models in the course of its
business activities. Examples include the use of model outputs to
support measuring and assessing risk exposures (including credit
and market risk), valuation of positions, calculating regulatory
capital and liquidity requirements and automation of operational
processes. The models used for stress-testing purposes also play
a key role in ensuring NWM N.V. Group holds sufficient capital,
even in stressed market scenarios.
Key developments in 2025
•
Continued with a programme of work to implement model
risk management (MRM) framework changes that were
introduced in 2024 in response to PRA’s Supervisory
Statement 1/23 across the model landscape.
•
NatWest Group introduced further updates to the MRM
framework to address feedback received from the PRA
following their industry-wide thematic review of MRM and
further improve model risk management practices, which
NWM N.V. Group will continue to enhance against ECB
requirements.
•
The MRM framework brought into scope deterministic
quantitative methods, which are complex and material
calculators that although not technically models still present
similar risks.
•
Enhanced the framework for the independent validation of
models.
•
Delivered model inventory design changes to support
implementation of MRM framework enhancements,
including a focus on recording of model use, which has
enabled better oversight and risk management of models.
•
Continued focus on improving the completeness and
accuracy of model risk data contained within the inventory
through enhanced oversight metrics and targeted
remediation work.
Governance
Risk governance for model risk is in line with the approach
outlined in the Risk management framework section. A
governance framework is in place in NWM Group in which NWM
N.V. Group participates, to ensure policies and processes
relating to models are appropriate and effective. Two roles are
key to this – model risk owners and model validation leads.
Model risk owners are responsible for model approval and
ongoing performance monitoring. Model validation leads, in the
second line of defence, are responsible for oversight, including
ensuring that models are independently validated prior to use
and on an ongoing basis aligned to the model’s tier.
NWM N.V. Group does not own models, therefore the most
relevant role is model user representative as it ensures the
participation in the model life cycle. NWM N.V. Group has
assigned model user representative role for each used model.
Model risk matters are governed and escalated to senior
management through the NWM N.V. Group Model Risk
Committee. The NWM N.V. Group Model Risk Committee’s goal
is to focus more on the model risk challenges in NWM N.V.
Group. It is a sub-committee of the Management Risk
Committee.
Additionally, model risk is discussed as required by the Managing
Board, the Board Risk Committee and the Supervisory Board.
Models used for regulatory reporting may additionally require
regulatory approval before implementation.
Risk appetite
Risk appetite for model risk is in line with the approach outlined
in the Risk management framework section.
Measurement and monitoring
The level of risk relating to an individual model is assessed
through a model risk rating that is based on the model’s
materiality and validation rating. This approach provides the
basis for model risk appetite measures and enables model risk to
be robustly monitored and managed across NWM N.V. Group.
Policies, toolkits and model standards related to the
development, validation, approval, implementation, use and
ongoing monitoring of models are in place to ensure adequate
control across the lifecycle of an individual model.
All models developed are assigned a
model tier
,
based on the
model’s materiality and complexity. Risk-based model tiering is
used to prioritise risk management activities throughout the
model lifecycle, and to identify and classify those models which
pose the highest risk to NWM N.V.
Group’s
business activities,
safety and/or soundness.
Validation of material models is conducted by an independent
risk function comprising of skilled, well-informed subject matter
experts.
This is completed for new models or material amendments to
existing models and as part of an ongoing periodic programme
to assess model performance.
The frequency of periodic revalidation is aligned to the tier of the
model. The independent validation focuses on a variety of model
features, including model inputs, model processing, model
outputs, the implementation of the model and the quality of the
ongoing performance monitoring. Independent validation also
focuses on the quality and accuracy of the development
documentation and the model’s compliance with regulation.
The model materiality combined with the validation rating
provides the basis for model risk appetite measures and enables
model risk to be robustly monitored and managed across NWM
N.V. Group.
Ongoing performance monitoring is conducted by model owners
and overseen by the model validators to ensure parameter
estimates and model constructs remain fit for purpose, model
assumptions remain valid and that models are being used
consistently with their intended purpose. This allows timely
action to be taken to remediate poor model performance and/or
any control gaps or weaknesses.
Mitigation
Model risk is inherent in the use of models. It is managed by
refining or redeveloping models where appropriate – either due
to changes in market conditions, business assumptions or
processes – and by applying adjustments to model outputs
(either quantitative or based on expert opinion). Enhancements
may also be made to the process within which the model output
is used in order to further limit risk levels.
Risk and capital management continued
NatWest Markets N.V.
Annual Report and Accounts 2025
48
Reputational risk
Definition
Reputational risk is the risk of damage to stakeholder trust due
to negative consequences arising from internal actions or
external events.
Sources of risk
The three primary drivers of reputational risk are: failure in
internal risk management systems, processes or culture; NWM
N.V. Group’s actions materially conflicting with stakeholder
expectations; and contagion (when NWM N.V. Group’s
reputation is damaged by failures in key sectors including the
NWM N.V. Group’s supply chain or other partnerships).
Key developments in 2025
•
Reputational risk assessment guidance was updated.
Colleagues in relevant roles received updated training on key
aspects of the policy and framework.
•
Enhancements were made to expand the requirements of
the reputational risk policy to suppliers and third parties.
•
The environmental, social and ethical (ESE)
(1)
animal welfare,
mining and metals and forestry, fisheries and agribusiness
risk acceptance criteria were reviewed and updated in line
with strategic objectives.
Governance
A reputational risk policy supports reputational risk management
across NWM N.V. Group. Material reputational risks to NWM
N.V. Group are escalated via the NatWest Group reputational
risk register which is reported at every meeting of the NatWest
Group Reputational Risk Committee.
The NatWest Group
Reputational Risk Committee also opines on matters that
represent material reputational risks. The NatWest Group
Executive and Board Risk Committees oversee the identification
and reporting of reputational risk.
Risk appetite
NatWest Group manages and articulates its appetite for
reputational risk through a qualitative reputational risk appetite
statement and associated quantitative measures which are set
at NatWest Group level.
NatWest Group seeks to identify, measure and manage risk
aligned to stakeholder trust. However, reputational risk is
inherent in NatWest Group’s operating environment and public
trust is a specific factor in setting reputational risk appetite.
Monitoring and measurement
Relevant internal and external factors are monitored through
regular reporting. They are escalated, where appropriate, to the
relevant NatWest Group Reputational Risk Committee.
Additional key risk indicators for material risks being monitored
are also reported to the NatWest Group Reputational Risk
Committee and to the Executive and Board Risk Committees.
NWM N.V Group monitors and reports any escalations to
NatWest Group through its own Boards.
Mitigation
Standards of conduct are in place across NWM N.V. Group
requiring strict adherence to policies, procedures and ways of
working to ensure business is transacted in a way that meets –
or exceeds – stakeholder expectations.
External events that could cause reputational damage are
identified and mitigated through NatWest Group’s top and
emerging risks process (where sufficiently material) as well as
through the NatWest Group and business level reputational risk
registers.
(1) From 1 January 2026, the name of the ESE Risk Framework was updated to the
Environmental & Social Risk Framework. This change better reflects the framework's
underlying methodology which focuses on a risk-based approach aligned to organisational
risk appetite, rather than values-based judgements.
Corporate governance
NatWest Markets N.V.
Annual Report and Accounts 2025
49
Page
Introduction
49
Corporate Governance in the Netherlands
49
Approval of Annual Report
49
Boards
49
The report of the Supervisory Board
50
The report of the Managing Board
52
Code of conduct
53
Employees
53
The Dutch Banking Code (Code Banken)
53
Remuneration policy
54
Management’s report on the Annual Report 2025
for purposes of Section 5:25c sub 2 Financial
Supervision Act
57
Introduction
In order to achieve high standards of corporate governance,
NWM N.V. Group organises its business in a way that promotes
first-class stewardship by the Managing Board and effective
supervision by the Supervisory Board. Integrity, transparency
and accountability are key elements of NWM N.V. Group’s
corporate governance, and they are embedded in its business as
a whole. These key elements ensure that the controls and
oversight necessary for effective risk management, compliance
with regulations, and accurate and complete disclosure of
information to the market are effective.
RBS Holdings N.V. (RBSH N.V.) is a wholly owned subsidiary of
NatWest Markets Plc (‘NWM Plc’ or ‘the intermediate holding
company’). RBSH N.V. is the parent company of NatWest
Markets N.V. (NWM N.V.). NatWest Group plc is ‘the ultimate
holding company’. The term ‘NatWest Group’ comprises
NatWest Group plc and its subsidiary and associated
undertakings.
NWM N.V. is a licenced bank regulated by the European Central
Bank (ECB), the De Nederlandsche Bank (’Dutch Central Bank’)
and the Autoriteit Financiële Markten (AFM).
Corporate governance in the Netherlands
NWM N.V. Group ensures proper corporate governance by
focusing on the Dutch Banking Code (Code Banken) which
contains specific corporate governance rules and principles for
all banks in the Netherlands.
The Code Banken requires banks in the Netherlands to either
comply with the rules and principles as set out in the Code
Banken or explain any deviation from it. The Code Banken is
applicable to NWM N.V. Group as it has a banking licence issued
under the Dutch Financial Supervision Act.
NWM N.V. Group operates in line with the requirements under
the Code Banken. A further explanation on compliance with the
updated Code Banken is provided on page 53 of this report.
European Banking Authority (EBA) guidelines on
internal governance
The EBA previously issued guidelines relating to internal
governance arrangements of credit institutions. These consider
weaknesses identified in the financial crisis and built upon the
Committee of European Banking Supervisors (CEBS) Guidelines.
The EBA guidelines are implemented by the local competent
authorities, which is the Dutch Central Bank. NWM N.V. Group
adheres to these guidelines. On 7 August 2025, the EBA
launched a public consultation on its revised guidelines on
internal governance. Once these revised guidelines come into
force, the NWM N.V. Group will implement and reflect any
necessary changes.
Wet beloningsbeleid financiële ondernemingen
On 7 February 2015, the Wet beloningsbeleid financiële
ondernemingen (Wbfo) came into force. With this legislation, the
Dutch government ensures that financial services companies
implement a sound remuneration policy and avoid payment of
excessive variable remuneration. NWM N.V. Group continues to
adhere to these principles.
Further information on the remuneration policy can be found in
the 2025 NatWest Group Annual Report and Accounts, available
at natwestgroup.com,
as well as the Report Code Banken
included further in this annual report.
Approval of Annual Report
The Managing Board approved the Annual Report at its meeting
on 17 February 2026. The Supervisory Board also approved the
Annual Report at its meeting on 17 February 2026. NWM N.V.
Group has proposed to its Shareholders that it adopts the 2025
financial statements, as included in this Annual Report, and
discharge the Managing Board and Supervisory Board in respect
of their management and supervision respectively.
Boards
RBSH N.V. and NWM N.V. are public limited liability companies
(‘naamloze vennootschap’) incorporated under the laws of the
Netherlands. Both companies have a two-tier system of
corporate governance consisting of a Managing Board and a
Supervisory Board. The day-to-day management of the
companies is vested with the Managing Board, supervised by
the Supervisory Board. The members of each of the Managing
Board and Supervisory Board of RBS Holdings N.V. and NWM
N.V. are the same.
Changes during 2025
Mr Maarten Klessens took over Mr Frank Dangeard’s
responsibilities as Interim Chair of the Supervisory Board, in
addition to his role as Chair of the Board Risk and Audit
Committees on 25 March 2025. Subsequently, on 23 April 2025,
Mr Frank Dangeard resigned from the Supervisory Board
(1)
.
During 2025 the NWM N.V. Supervisory Board welcomed three
new members with Mr Julio Alvaro, Ms Sylvie Billion and Ms
Carola von Schmettow joining on 23 September, 15 October
and 2 December 2025 respectively. Mr Alvaro was also
appointed Chair of the Audit Committee, succeeding Mr
Klessens.
There were no changes to the composition of the Managing
Board during 2025.
(1)
The search for a permanent Chair is at an advanced stage.
Further details regarding
the proposed appointment will be provided in due course.
Corporate Governance continued
NatWest Markets N.V.
Annual Report and Accounts 2025
50
The report of the Supervisory Board
This report provides an overview of the tasks and the activities
of the Supervisory Board during 2025.
The tasks of the Supervisory Board
The main task of the Supervisory Board is to supervise the
Managing Board, as well as the general affairs of NWM N.V.
Group and its associated enterprises. It assists and advises the
Managing Board and supervises the corporate governance
structure of NWM N.V. Group.
In performing their duties, the members of the Supervisory
Board are guided by the interests of NWM N.V. Group, and the
businesses connected to it, taking into account the relevant
interests of NWM N.V. Group's stakeholders. Certain powers are
vested in the Supervisory Board, including the approval of
certain resolutions of the Managing Board. An overview of the
powers of the Supervisory Board can be found in the Corporate
Governance manual of NWM N.V. Group.
Members of the Supervisory Board
The Supervisory Board is an independent corporate body.
Members of the Supervisory Board are appointed by the
General Meeting of Shareholders. For each vacant seat the
Supervisory Board nominates one or more candidates based on
the criteria included in the membership profile which set out the
expectations of a member.
The Chair and Vice-Chair of the Supervisory Board are
appointed by the Supervisory Board from among its members.
The Supervisory Board confirms that its current composition has
the necessary experience, expertise and independence to
execute their duties. They have also sufficient accounting and
financial management expertise to understand NWM N.V.
Group’s business, financial statements and risk profile.
All appointments were made in accordance with the Supervisory
Board profile resulting in the current composition of the
Supervisory Board.
Supervisory Board members are appointed for a term of four
years and may be re-appointed after the end of their term, with
a maximum term of 12 years from the date of their first
appointment.
Newly appointed Supervisory Board members undertake an
induction programme which is tailor-made and adjusted to the
specific needs of each new Supervisory Board member.
They also undertake a series of meetings with the management
of NWM N.V. Group to gain insight and understanding of NWM
N.V. Group and its enterprises.
In case of a material (potential) conflict of interest between a
member of the Supervisory Board and NWM N.V. Group, the
Chair of the Supervisory Board shall be notified. If the Chair of
the Supervisory Board has a material (potential) conflict of
interest, the Vice-Chair is notified. The respective Supervisory
Board member will not take part in the resolution and decision-
making process by the Supervisory Board where a conflict of
interest exists. During 2025, no conflicts of interest have arisen.
Details of the remuneration of the Supervisory Board can be
found in Note 26 to the consolidated financial statements.
Activities of the Supervisory Board
The Supervisory Board considers various matters including those
related to strategy, finance, risk, audit, remuneration and
people.
The Supervisory Board considers various matters
including those related to strategy, finance, risk, audit,
remuneration and people. The Supervisory Board is supported
by an Audit Committee, Risk Committee, Performance &
Remuneration Committee and Nomination Committee, each
having its own terms of reference setting out their scope and
purpose.
Regular and ad-hoc Supervisory Board meetings were held
during 2025. All members of the Supervisory Board have
complied with the requirement to attend meetings on a frequent
basis.
The Supervisory Board has set a Board diversity policy to
promote diversity and inclusion in the composition of the
Managing and Supervisory Board of the NWM N.V. Group. It is
fully aligned to NWG’s Board Diversity Policy and the specific
EBA requirements. It also includes the diversity ambition levels
which the Dutch Diversity Quota and Targets Acts requires
larger, non-listed companies to set. The target is to reach a 25%
female representation in the Managing Board and 33% in the
Supervisory Board. The targets have been met.
Composition of the Supervisory Board
The members of the Supervisory Board as at 17 February 2026 are as follows:
Date of first appointment
Date for re-election
Maarten Klessens (Interim Chair)
(67, Dutch, male)
2 September 2015
30 August 2026
Annelies van der Pauw
(65, Dutch, female)
3 March 2019
3 March 2027
Robert Begbie
(64, British, male)
1 April 2020
1 April 2028
Julio Alvaro
(64, Spanish, male)
23 September 2025
23 September 2029
Sylvie Billion
(67, French, female)
15 October 2025
15 October 2029
Carola von Schmettow
(61, German, female)
2 December 2025
2 December 2029
Corporate Governance continued
NatWest Markets N.V.
Annual Report and Accounts 2025
51
Maarten Klessens
Interim Chair of the Supervisory Board and Chair of the Board
Risk Committee
Mr Klessens was appointed as an independent member of the
Supervisory Board on 2 September 2015.
In 2016 he joined the Supervisory Board of Bank of Africa
Holding S.A. and in 2017 he joined the Supervisory Board of
DHB Bank N.V. in the Netherlands. He was senior advisor
Benelux for StormHarbour Securities LLP, London in 2014 and
2015. From 2011 he was acting head of Global Country Risk for
NatWest Group and was responsible for country appetite setting
and exposure management, with special attention for the
financial stress in the Eurozone periphery.
Mr Klessens started his career with ABN AMRO in 1986, in
structured aircraft finance. In 1997 he was appointed Corporate
Executive Vice President for ABN AMRO and had subsequent
responsibilities in wholesale product teams, client management
and Group Risk. For 12 years he was a voting member of ABN
AMRO's Group Risk Committee. Mr Klessens holds a
postgraduate in Financial Economics of Tilburg University and a
Master’s in Business Economics of Erasmus University
Rotterdam and has had executive training at IMD, INSEAD and
University of Michigan.
Annelies van der Pauw
Chair of the Board Performance & Remuneration and
Nomination Committees
Ms Van der Pauw was appointed as an independent member of
the Supervisory Board on 3 March 2019.
Ms Van der Pauw was a partner of the international law firm
Allen & Overy LLP (A&O) until 2020 and subsequently chaired
the Amsterdam corporate practice group of A&O since 2006. Ms
Van der Pauw was with A&O and its predecessors since 1987. In
her practice, Ms Van der Pauw focused on mergers and
acquisitions and corporate governance issues.
Ms Van der Pauw also has extensive equity capital markets
experience. In addition to a strong understanding of the legal
environment in the Netherlands, Ms Van der Pauw was also the
co-chair of the A&O global corporate responsibility programme
for many years and a member of the board of the global A&O
Foundation.
Presently Ms Van der Pauw continues to hold various non-
executive board memberships in the private and public sector.
Robert Begbie
Member of the Supervisory Board
Mr Begbie joined the Supervisory Board on 1 April 2020 and was
appointed CEO, Commercial & Institutional in March 2024. The
Commercial & Institutional franchise supports customers ranging
from entrepreneurs and start-ups through to multi-nationals and
financial institutions.
Mr Begbie has been with NatWest Group for over 40 years and
has extensive experience in treasury and capital markets.
During his career, he has built successful capital markets
businesses across fixed income, derivatives, asset management
and cash markets and led teams in the UK, Europe, Asia and
the US.
After spending 20 years in our Markets business, Mr Begbie
joined NatWest Group Treasury in 2009 where he was
instrumental in transforming the NatWest Group balance sheet.
In 2017 Mr Begbie was appointed as NatWest Group Treasurer
with responsibilities for all aspects of Treasury and the
management of the bank’s balance sheet.
He holds an MBA from CASS Business School and is a former
president of The Chartered Institute of Bankers in Scotland
(London Branch).
Julio Alvaro
Chair of the Audit Committee
Mr Alvaro was appointed as an independent member of the
Supervisory Board on 23 September 2025.
Mr Alvaro started his career at KPMG Spain in 1985 and was
made partner in 1996 until his retirement in 2024. During his
career at KPMG, Mr Alvaro specialised in auditing financial
services businesses including banks, asset managers and
insurance companies. He has a granular understanding of
financial markets gained through nearly 40 years of auditing
financial services companies both in Spain and internationally.
Mr Alvaro also led the Department of Financial Services
Professional Practice of KPMG in Spain for 20 years between
2004 and 2024.
Sylvie Billion
Member of the Supervisory Board
Ms Billion was appointed as an independent member of the
Supervisory Board on 15 October 2025.
Ms Billion started her career at BNP Paribas in Paris and
subsequently performed roles at Arthur Andersen as well as
ABN AMRO. In 2001 she moved to EDF Group, serving as
Financial Controlling Director, Group Financial Risk Controller,
Group Treasurer and then CFO of the regulated subsidiary
Enedis, the distribution network in France. Leaving EDF in 2012,
she performed CFO and head of IT and sourcing roles at a non-
profit organisation.
In 2019, Ms Billion returned to EDF Group as
Financial Director of the International Division, before being
appointed CFO and COO of EDF Trading in 2021.
Ms Billion is a Member of the EDF Trading Board and the EDF
Trading Executive Committee as well as being a Member of the
Board of Directors at EDFT Europe, EDFT Markets and EDF
Trading Holdings (within EDF Trading).
Ms Billion is also a
Member
of the Supervisory Board and Audit and Finance
Committee at research centre and hospital, Institut Curie.
Carola von Schmettow
Member of the Supervisory Board
Ms Schmettow was appointed as an independent member of the
Supervisory Board on 2 December 2025.
Ms Schmettow is a former banking executive with a career at
HSBC spanning nearly 30 years.
In her first role at HSBC, Ms
Schmettow built out risk management systems for the
derivatives business before becoming Head of Treasury. From
1999 to 2003, Ms Schmettow was CEO of what is now HSBC
Global Asset Management with responsibility for 80bn USD of
managed assets. From 2006 until 2015, Ms Schmettow was a
member of the executive board for HSBC Trinkaus & Burkhardt
AG covering global markets and securities services, capital
financing and asset management. She later became CEO of
HSBC Germany between 2015 and 2021.
In addition to her senior executive roles in banking, Ms
Schmettow was Chair of the Exchange Council of EUREX
Germany from 2014 to 2021 and Deputy Chairwoman of the
Exchange Council Frankfurt Stock Exchange from 2020 to 2021.
Presently, Ms Schmettow holds a range of non-executive roles.
Corporate Governance continued
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Annual Report and Accounts 2025
52
The report of the Managing Board
The members of the Managing Board of NWM N.V. Group are
responsible for the general affairs of NWM N.V. Group and its
subsidiaries. The members are appointed by the General
Meeting of Shareholders.
The Supervisory Board of NWM N.V., through its Nomination
Committee, nominates one or more candidates for each vacant
seat in the Managing Board. If the Supervisory Board nominates
two or more candidates for a vacant seat in the Managing
Board, the nomination list is binding. The members of the
Managing Board are accountable both collectively and
individually for all decisions taken by the Managing Board.
The Chairman of the Managing Board leads the members of the
Managing Board in its overall management of NWM N.V. Group
to achieve its performance goals and ambitions. The Chairman
of the Managing Board is the main point of liaison with the
Supervisory Board. The Chief Financial Officer is responsible for
the financial affairs of NWM N.V. Group. Alongside their overall
corporate responsibilities, the members of the Managing Board
are responsible for the management of the control and support
functions. The Managing Board has delegated certain tasks to
several Managing Board committees which are described on
pages 52 to 53 of this report.
Composition of the Managing Board
The members of the Managing Board as at 17 February 2026 are as follows:
Date of first appointment
Date for re-election
Vincent Goedegebuure (Chair)
(52, Dutch, male)
9 May 2022
9 May 2026
Cornelis Visscher
(60, Dutch, male)
12 July 2013
18 July 2029
Britta Achmann
(54, German, female)
1 December 2024
1 December 2028
Mickey van Wieringen
(56, Dutch, male)
1 May 2024
1 May 2028
Vincent Goedegebuure
Chief Executive Officer and Chairman of the Managing Board
Mr Goedegebuure is an experienced senior executive with over
20 years of experience in senior roles in the finance sector who
took up his present role in May 2022. In prior roles, he has led
international business units and leadership teams across the EU,
Americas and Asia-Pacific.
Prior to this role, Mr Goedegebuure worked for ABN AMRO and
held a variety of global leadership roles in Structured Finance,
Global Markets and CIB. He holds a Master’s degree in
Economics from the University of Groningen and a Master’s
degree in Business Administration from IESE Business School.
Cornelis Visscher
Chief Financial Officer
Mr Visscher graduated from the Vrije Universiteit in Amsterdam
with a degree in Business Economics, specialised in Financial
Accounting and Management Accounting. He started his career
at ABN AMRO in 1988, where, after several functions
in
Divisional and Group Finance, he ultimately became the head
of the Group Consolidation Department. Following the
acquisition of ABN AMRO by NatWest Group and Consortium
members, Mr Visscher joined NatWest Group.
As of 2013 Mr Visscher is the Chief Financial Officer for NWM
N.V. Group and a member of the NWM N.V. Managing Board.
From September 2021 until May 2022, he took on the role and
accountabilities of interim Chief Executive Officer and Chairman
of the NWM N.V. Managing Board. He was also a member of
NatWest Markets Executive Committee.
Britta Achmann
Chief Risk Officer
Ms Achmann joined NWM N.V. Group in December 2024 as
Chief Risk Officer and Managing Board member.
As a highly accomplished international risk executive, she brings
over 20 years of experience in the financial services industry,
gained across leading institutions in the EU, UK and USA. Her
career spans both technical and senior leadership roles,
beginning in investment banking front office sales and trading
before transitioning into risk management in 2010. Since then,
she has held a number of senior risk positions, including previous
experience as Chief Risk Officer.
Specialising in market and model risk, Ms Achmann has built a
strong track record across globally recognised organisations
such as JPMorgan, RBS Group, Deutsche Bank, Flow Traders,
and most recently Bank of America.
Ms Achmann holds an MBA from Carnegie Mellon University, a
Master’s degree in Probability & Statistics from Syracuse
University, and a Master’s degree in Mathematics from
Technische Universität Berlin.
Mickey van Wieringen
Chief Operating Officer
Mr van Wieringen was appointed on 1 May 2024 as Managing
Board member and Chief Operating Officer.
Mr van Wieringen has more than 25 years’ of experience in the
banking and financial services, of which 4 years with Price
Waterhouse Coopers, 18 years at ING Bank in Bankwide
Operations (Head of Global Risk & Control and Global Process
Leader for Financial Crime) and in Internal Audit (Chief Auditor
Global Asset Management and Chief Auditor Risk & Finance).
Mr van Wieringen joined NWM N.V. Group in July 2019, starting
as Head of Audit for NWM N.V. and since 2022 also covering the
NWM regions US and APAC.
Mr van Wieringen is a Chartered Accountant and holds a post
graduate degree in Accountancy from the University of
Amsterdam.
Managing Board committees
In order to provide effective oversight and leadership, the
Managing Board has three sub-committees; the Management
Risk Committee (MRC), the Assets & Liabilities Committee
(ALCo) and the Executive Disclosure Committee (EDC).
Management Risk Committee (MRC)
Previously named the Risk & Control Committee, the MRC
oversees the risk framework within NWM N.V. Group, monitors
the actual risk profile and advises the Managing Board and
Board Risk Committee on these matters. Its scope is both
financial as well as non-financial risk within NWM N.V. Group.
Asset & Liability Committee (ALCo)
The Managing Board has delegated to the Assets & Liabilities
Committee the responsibility for the management of capital,
liquidity, interest rate and foreign exchange risk. This includes
responsibility for reviewing, approving and allocating balance
sheet, capital, liquidity and funding limits.
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Annual Report and Accounts 2025
53
Executive Disclosure Committee
The Executive Disclosure Committee advises and assists the
Managing Board in fulfilling its responsibilities for overseeing the
accuracy and timeliness of public disclosures made by NWM N.V.
Group. This inter alia includes advising the Managing Board on
the disclosure of financial information.
Code of conduct
NatWest Group’s Code of Conduct (Our Code) informs everyone
what to expect of each other, what to do when unsure of a
decision, and where to go for advice when needed. It is available
at www.natwestgroup.com/who-we-are/about-natwest-
group/our-values.html.
In the normal course of business of NWM N.V. Group, situations
may arise which lead to a potential or actual conflict of interest
collectively referred to as 'Conflicts of Interest'. Conflicts of
Interest can arise where decisions or actions are unduly
influenced by business or personal motivations which have the
potential to damage customer interests, the Group's interests, or
those of another NatWest franchise and/or legal entity.
NatWest Group has a conflicts of interest management policy in
place which requires identification of personal and institutional
level conflict of interest situations relevant to its specific business
activities. The policy helps ensure that conflicts are prevented or
managed, so they do not adversely impact the Group’s
customers and/ or stakeholders.
The NWM N.V. Group Directors are under a legal duty to avoid
conflicts of interest, a duty which they owe separately to each
company they are a director of.
The legal duty on Directors also requires them to avoid any
conflict of interest between their duties to NatWest Group and
their external interests, such as any directorships they hold with
outside companies. To discharge their duties effectively, the
corporate governance team supports Directors in identifying and
recording conflicts of interest and ensuring that they are
managed in accordance with the relevant rules and regulations.
Employees
Our colleagues
As at 31 December 2025, NWM N.V. Group employed 255
people within continuing operations (2024 – 253). A modest
increase in staffing levels is expected. Details of related costs are
included in Note 3 to the consolidated financial statements.
Employee consultation
NWM Group recognises employee representatives such as
employee bodies and work councils in several businesses and
countries, for example the Netherlands, and management
regularly discuss developments and updates on the progress of
its strategic plans with the European Employee Council (EEC).
NWM Group has ongoing engagement and discussion with those
bodies given the scale of change taking place across NWM
Group.
Inclusion
NatWest Group’s inclusion guidelines apply to all NWM N.V.
Group colleagues globally and cover being LGBT Innovative,
Gender Balanced, Disability Smart, Ethnically Diverse, all leading
to an Inclusive Culture. Detailed information can be found on
pages 62 to 63 of the 2025 NatWest Group Annual Report and
Accounts and on the Sustainable Banking pages at
natwestgroup.com.
The Dutch Banking Code (Code Banken)
Introduction
The Code Banken was drawn up by the Netherlands Bankers'
Association (NVB) and is mandatory for NWM N.V. Group as
stated in Book 2 of the Civil Code.
The Code Banken offers specific provisions, but underlying these
provisions, its aim is to instil learning in the banking sector
following the financial crisis. Drawing lessons and implementing
change with the aim to restore trust among all our stakeholders,
clients, staff, investors and society at large. NatWest Group,
including NWM N.V. Group, has undergone profound change
following the crisis and is committed to high standards of
corporate governance, business integrity and professionalism in
all its activities.
Corporate Governance codes and the global footprint
of NatWest Group
NWM N.V.’s ultimate parent company is NatWest Group plc.
When implementing the Code Banken, the Managing Board and
Supervisory Board of NWM N.V. consider the effects of similar
codes of conduct implemented across NatWest Group with the
aim to align all businesses within the wider NatWest Group.
Compliance with the Code Banken
NWM N.V. Group considers the Code Banken as an important
yardstick for the way banks draw lessons from the crisis. NWM
N.V. Group takes account of all relevant remuneration
regulatory regimes, including the Code Banken and the
requirements as included in the Dutch Financial Supervision Act,
in designing and implementing its remuneration policy as well as
NWM N.V. Group’s corporate governance structure.
Supervisory Board
The required expertise and experience are well embedded in the
Supervisory Board providing for an independent board with a
diverse composition.
A defined process for the engagement and recruitment of a
Supervisory Board member has been established. If a vacancy
for a new member exists, a new member is sought based on an
established supervisory board profile to ensure that the
knowledge and expertise obtained when filling the vacancy is
fully complementing the composition of the board. This profile is
amended to reflect the specific requirements for the role.
If the position of Chair of the Supervisory Board would become
vacant, a specific profile would be drawn up to ensure alignment
with the specific tasks attributed to the role.
The search for a
permanent Chair is at an advanced stage.
Further details
regarding the proposed appointment will be provided in due
course.
All Supervisory Board members have committed themselves to
fulfil their responsibilities as board members to the best of their
ability. Their attendance at meetings is recorded. The Board
furthermore operates according to a set of rules included in the
Corporate Governance manual. These have been agreed by all
Board members. The remuneration received by Supervisory
Board members is not dependent on NWM N.V. Group’s results.
In addition, a lifelong learning programme covering aspects as
included in the Code Banken now also includes specific training
on Climate & Environmental related risks.
Managing Board
The composition of the Managing Board of NWM N.V. Group
ensures that all business areas and all control and support
functions are well represented on the board. The board
currently comprises a Chief Executive Officer (CEO), a Chief
Financial Officer (CFO), a Chief Risk Officer (CRO) and a Chief
Operating Officer (COO).
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Annual Report and Accounts 2025
54
To further clarify the specifics of each role on the board and to
ensure adherence to agreements made on procedure and
governance, a Corporate Governance manual has been
prepared.
The Managing Board will continuously ensure a prudent risk
appetite, based on the risk appetite framework approved by the
Supervisory Board. The risk appetite framework shall be
approved by the Supervisory Board at least once a year and is
actively monitored during the year. Any material changes in the
interim shall also require the Supervisory Board’s approval. The
Managing Board takes the interests of all stakeholders (e.g.
employees, clients, shareholders) into account in their decision
making. The Managing Board recognises that duty of care for
clients is an important component of doing business.
In line with the requirement of the Code Banken, Managing
Board members take the Banker’s Oath.
The principles in the Banker’s Oath are incorporated into
NatWest Group’s code of conduct which is issued to all new
employees joining NWM N.V. Group.
Risk Policy
The Managing Board has arranged risk management in an
adequate manner to ensure the Managing Board is aware in
good time of any material risks run by the bank and to enable
the Managing Board to manage these risks properly. The Chief
Risk Officer reports into the Chief Executive Officer. The
Managing Board, through its sub committees, the MRC and the
ALCo, takes any decision that is of material significance to the
risk profile, the capital position or the liquidity impact.
Through its Board Risk Committee, the Supervisory Board
reviews and discusses the risk profile of NWM N.V. Group during
each of its meetings. This is based on a risk appetite statement
which it reviews on a regular (i.e. a minimum of once a year)
basis. More information on the risk organisation of NWM N.V.
Group can be found on pages 11 to 15 of this report.
Audit
To ensure the function’s independence, the Head of NWM N.V.
Internal Audit reports to the Chair of the Audit Committee of
NWM N.V. and the Chief Audit Executive, NWM Plc, who in turn
reports to the Chair of the Audit Committee of NWM Plc.
Internal Audit reports its opinion and findings on the quality of
the control framework, the system of governance and the risk
management of NWM N.V. to the Audit Committee. Internal
Audit furthermore presents its annual audit plan to the Audit
Committee. The Managing Board shall ensure that a systemic
audit is conducted of the risks managed in relation to the
business activities of NWM N.V. Group.
The external auditor was invited to share their audit plan which
summarizes key areas of audit focus, and amongst others audit
progress and the outcome of the audit work including the
findings and observations on the key audit matters with the
Audit Committee.
EY Accountants B.V. are the current auditors of the company.
Following a tender undertaken in 2022, overseen by the
NatWest Group Audit Committee, NatWest Group announced its
intention to appoint PricewaterhouseCoopers LLP (PwC) as
auditors for the financial period ending 31 December 2026. This
will be the last period of audit by EY Accountants B.V. as they
will not be proposed for re-appointment as auditors by the
company. A resolution to appoint PricewaterhouseCoopers
Accountants N.V. as the company’s auditors will be proposed at
a future General Meeting.
Remuneration Policy
Set out below is an overview of the NWM N.V. Remuneration
Policy.
Remuneration
This section contains disclosures which are required in
accordance with EU regulatory requirements and the Basel
Committee on Banking Supervision Pillar 3 disclosure
requirements. They also take into account the European
Banking Authority (EBA) guidelines on sound remuneration
policies and the applicable Dutch remuneration rules.
It should be read in conjunction with the remuneration section of
the RBS Holdings N.V. Pillar 3 Report which contains a number
of quantitative remuneration disclosures and can be found on
natwestgroup.com as well as the Directors’ remuneration report
set out in the NatWest Group 2025 Annual Report and
Accounts.
Remuneration policy for all colleagues
NWM N.V. is an indirectly owned subsidiary of NatWest Group.
Its remuneration policy is fully aligned to NatWest Group’s
remuneration policy principles with amendments only to comply
with applicable Dutch remuneration rules.
The remuneration policy is designed to support NatWest Group’s
purpose and business strategy, reinforce the desired culture and
behaviours, and promote the long-term success of NatWest
Group and NWM N.V. The aim is to drive a performance culture
and the delivery of strategic ambitions; while remaining aligned
with effective risk management.
The remuneration policy applies the same principles to
everyone, including Material Risk Takers (MRTs), with some
minor adjustments where necessary to comply with relevant
country-specific regulatory requirements. The main elements of
the policy are set out below
Base salary
The purpose is to provide a competitive level of fixed cash
remuneration.
Operation
We review base salaries annually to ensure they reflect the
talents, skills and competencies the individual brings to the
business.
Role-based allowance
Certain MRT roles receive role-based allowances. The purpose is
to provide fixed pay that reflects the skills and experience
required for the role.
Operation
Role-based allowances are fixed allowances which form an
element of overall fixed remuneration for regulatory purposes.
They are based on the role the individual performs.
They are delivered in cash and/or shares depending on the level
of the allowance and the seniority of the recipient. Shares are
subject to a minimum three-year retention period.
Benefits and pension
The purpose is to provide a range of flexible and competitive
benefits.
Operation
In most jurisdictions, benefits or a cash equivalent are provided
from a flexible benefits account. Pension funding forms part of
fixed remuneration and NatWest Group does not provide
discretionary pension benefits.
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Annual Report and Accounts 2025
55
Annual bonus
The purpose is to support a culture where individuals are
rewarded for the delivery of superior performance, taking into
account NatWest Group’s strategic ambitions and purpose. At
NWM N.V. all employees are in scope to be considered for an
annual bonus, including MRTs, the executive directors and
members and attendees of senior executive committees, as it is
appropriate for them to have some pay at risk if performance is
not at the required level.
Operation
The annual bonus pool is based on a proportion of attributable
profit adjusted for performance against a balanced scorecard of
measures: financial performance; customer outcomes; people,
culture and diversity; risk management; risk events; and
progress against our strategic ambitions. Allocation from the
pool depends on the performance of the business area and the
individual.
We use a continuous performance management framework to
support individual performance assessment. We use a balanced
business scorecard to align goal setting with the business
strategy and regular check ins to track and assess performance.
This approach is designed to assess performance against
longer-term business requirements across a range of financial
and non-financial metrics. It also evaluates adherence to internal
controls and risk management. Performance assessments also
include behaviours that reflect the Group’s culture which are
aligned to each colleague’s job.
We also take risk and conduct performance into account.
Control functions are assessed independently of the business
units that they oversee. Performance goals and remuneration
are set according to the priorities of the control area, not the
targets of the businesses they support. The NatWest Group
Chief Risk Officer (CRO) and the NatWest Group Chief Audit
Executive have the authority to escalate matters to NatWest
Group Board level if management do not respond appropriately.
Independent control functions exist for NWM N.V. Multiple
reporting lines are in place into the legal entity CEOs and the
NWM Plc Control Function Head.
The variable remuneration of colleagues who work the majority
of their time in the Netherlands will, as a rule, not exceed 20% of
fixed pay. For colleagues who work the majority of their time
outside the Netherlands, their variable remuneration will, as a
rule, not exceed 100% of fixed pay.
For awards made in respect of the 2025 performance year,
immediate cash awards continue to be limited to a maximum of
£2,000. In line with regulatory requirements, for MRTs, 40% of
awards under €500,000 will be deferred over four years, with
certain roles subject to five-year deferral. This rises to 60% for
awards over €500,000 or for certain roles. For MRTs, a
minimum of 50% of any variable pay is delivered in shares and a
12-month retention period applies to all shares after vesting. All
awards are subject to malus and clawback provisions.
Guaranteed awards may only be granted for new hires in
exceptional circumstances in compensation for awards forgone
at their previous company and are limited to the first year of
service. Retention awards are only used in truly exceptional
circumstances such as major restructuring and where the
individual is a ‘flight risk’ and is viewed as critical to the
successful operation of the business or delivery of a business-
critical project. Whilst no performance conditions are attached to
retention awards, the colleague must continue to deliver to the
standard expectations of conduct and behaviour prior to the
award vesting.
Severance payments and/or arrangements can be made to
colleagues who leave NatWest Group in certain situations,
including redundancy. Such payments are calculated by a
predetermined formula set out within the relevant social plans,
policies, agreements or local laws. Where required by country-
specific requirements, limits apply to the maximum amount that
can be paid.
Sharing in Success awards
Our Sharing in Success scheme for all employees is intended to
further align colleagues with our strategic direction and drive
improvements in customer performance, only paying out when
NatWest Group has demonstrated satisfactory financial
performance and an intelligent approach to risk.
Operation
For 2025, we measured success based on succeeding with
customers, underpinned by financial performance, our approach
to risk and delivering value for shareholders. All employees are
eligible to receive a Sharing in Success award, provided they
remain employed by NatWest Group on the award date, and
these awards are delivered entirely in shares.
Criteria for identifying MRTs
The EBA as well as the PRA Rulebook set out criteria for
identifying MRT roles, which includes those staff whose activities
have a material influence over NatWest Group’s performance or
risk profile. These criteria are both qualitative (based on the
nature of the role) and quantitative (based on the amount a
colleague is paid).
In 2025, MRTs were identified for 12 legal entities (including at
parent, holding company and consolidated levels) within
NatWest Group. This included NWM N.V. The MRT criteria are
applied for each of these entities, and consequently many MRTs
are identified in relation to more than one entity.
The qualitative criteria can be summarised as: staff within the
management body; senior management; other staff with key
functional or managerial responsibilities including for risk
management; and staff who individually, or as part of a
Committee, have authority to approve new business products or
to commit to credit risk exposures and market risk transactions
above certain levels.
The quantitative criteria are: individuals earning £660,000 or
more in the previous year; individuals earning less than
£660,000 in the previous year, but more than a threshold set at
the higher of £440,000 or the average total earnings of the
management body and senior management for the relevant
legal entity and who can impact the risk profile of a material
business unit; and individuals in the top 0.3% of earners of the
relevant legal entity for the previous year. Although quantitative
criteria are stated in GBP above, the threshold for NWM N.V. is
determined based on local currency equivalent. In addition to the
qualitative and quantitative criteria, NatWest Group has applied
its own minimum standards to identify roles that are considered
to have a material influence over its risk profile.
Personal hedging strategies
The conditions attached to discretionary share-based awards
prohibit the use of any personal hedging strategies to lessen the
impact of a reduction in the value of such awards. Recipients
explicitly acknowledge and accept these conditions when any
share-based awards are granted.
Risk in the remuneration process
The approach to remuneration within NatWest Group and NWM
N.V. promotes effective risk management through having a clear
distinction between fixed remuneration (which reflects the role
undertaken by an individual) and variable remuneration (which is
directly linked to performance and can be risk-adjusted). Fixed
pay is set at an appropriate level to discourage excessive risk-
taking and which would allow NatWest Group and NWM N.V. to
pay zero variable pay.
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We achieve focus on risk through clear inclusion of risk in
performance goals, performance assessments, the
determination of variable pay pools, incentive plan design and
the application of malus and clawback. The NatWest Group
Performance and Remuneration Committee (RemCo) is
supported in this by the NatWest Group Board Risk Committee
(BRC) and the Risk function, as well as independent oversight by
the Internal Audit function. Legal entity specific independent
control functions are also involved in the remuneration process
as appropriate.
We use a robust process to assess risk performance, including
how effectively risk has been managed against the appetite
levels agreed by the NatWest Board. We consider a range of
measures across the following principal risks; capital risk;
earnings stability risk; liquidity and funding risk; credit risk;
traded market risk; non-traded market risk; pension risk;
conduct risk; financial crime risk; model risk; climate and nature
risk; operational risk; regulatory compliance risk and reputational
risk. We also consider our overall risk culture.
Remuneration arrangements are in line with regulatory
requirements; we disclose and discuss with the regulators as
appropriate.
Variable pay determination
For the 2025 performance year, NatWest Group operated a
robust control function-led multi-step process to assess
performance and determine the appropriate bonus pool value by
business area and function. The bonus pool outcome is driven by
Group performance and consideration is given to affordability,
shareholder alignment, capital and liquidity adequacy and overall
appropriateness.
The process uses: financial performance; customer outcomes;
people, culture and diversity measures; risk and control
performance and progress against our strategic ambitions to
consider a balanced scorecard of performance assessments at
the level of each business area or function. Risk and control
assessments confirm performance has been achieved with
appropriate consideration of risk, risk culture and conduct
controls; and that it is not inappropriately rewarded. We also
consider the impact of any material conduct and regulatory
reportable events.
The Group CRO reviews risk performance and material conduct
events and, if appropriate, a risk modifier may be applied to the
individual business and function bonus pools or to the overall
bonus pool. The Group CRO may recommend a reduction of a
bonus pool to Group RemCo if they consider that risk and
control performance goals have not been met or that the impact
of poor risk management has yet to be fully reflected in the
respective inputs.
The NatWest Group CEO will make a final recommendation to
the Group RemCo, informed by all the previous steps and their
strategic view of the business. The RemCo will then make an
independent decision on the final bonus pool taking all of these
earlier steps into account.
Bonus funding is allocated by the NatWest Group RemCo at a
franchise level. The allocation of bonus funding for NWM N.V.
starts within the NatWest Markets Plc franchise as determined
by the NWM Plc CEO using a range of performance measures
similar to those considered at NatWest Group level. The NWM
N.V. element is reviewed by the NWM N.V. Performance and
Remuneration Committee (NWM N.V. RemCo) and NWM N.V.
Supervisory Board (NWM N.V. SB) alongside control function
assessment on performance and risk to ensure it is fit for
purpose and meets capital adequacy requirements at the NWM
N.V. level. This will then be reviewed by the RBSH N.V.
Remuneration Committee (RBSH N.V. RemCo) who will make a
recommendation to the RBSH N.V. Supervisory Board who will in
turn review and recommend the final bonus pool to the NWM
Plc Remuneration Committee.
Remuneration and culture
NatWest Group continues to assess conduct and its impact on
remuneration as part of the annual NatWest Group-wide bonus
pool process and also via the accountability review framework.
At NatWest Group, many colleagues receive fixed pay and are
eligible for a Sharing in Success award only. They do not
participate in the bonus scheme. This structure provides them
with greater security and allows them to fully focus on the needs
of the customer. The RemCo will continue to review workforce
remuneration and the alignment of incentives and reward with
culture.
The governance of culture is clearly laid out. Senior
management function roles have clearly defined accountabilities
which are taken into account in their performance and pay
decisions. The Board and Sustainable Banking Committee also
play essential roles in setting and overseeing the Group’s
culture.
Accountability review process and malus/clawback
An accountability review process allows NatWest Group to
respond where new information would change our variable pay
decisions made in previous years and/or the decisions to be
made in the current year. The process is used to apply
commensurate ex-post risk adjustments to variable pay, where
material failure of risk management, material error or employee
misbehaviour are identified, and (for malus and in-year
reductions only), where there is a material downturn in
performance. Potential outcomes under the accountability
review process are:
•
malus - to reduce (to zero if appropriate) the amount of any
unvested variable pay awards prior to payment;
•
clawback - to recover awards that have already vested; and
•
in-year bonus reductions - to adjust variable pay that would
have otherwise been awarded for the current year.
As part of the acceptance of variable pay awards, colleagues
must agree to terms that state that malus and clawback may be
applied. Any variable pay awarded to MRTs is subject to
clawback for seven years from the date of grant. This period
can be extended to 10 years for MRTs who perform a ‘senior
management function’ under the Senior Managers Regime
where there are outstanding internal or regulatory investigations
at the end of the normal seven-year clawback period. This
period can be extended in order to comply with country-specific
requirements. Awards to other colleagues (non-MRTs) are
subject to clawback for 12 months from each vesting date.
Remuneration disclosures
The following disclosures are made in accordance with Article
1:120(2)(a)-(b) of the Dutch Financial Supervision Act. In 2025:
(a) the number of natural persons working under the
responsibility of NWM N.V. whose total annual remuneration
amounted to €1 million or more was five colleagues
(1)
; and
(b) the total amount of variable remuneration relating to natural
persons working under the responsibility of NWM N.V. was €15.8
million.
Further information relating to MRTs can be found within the
NWM N.V. Pillar 3 remuneration disclosures set out in the RBSH
N.V. Pillar 3 disclosure.
(1)
This includes individuals with elements of remuneration that have not yet been paid.
Corporate Governance continued
NatWest Markets N.V.
Annual Report and Accounts 2025
57
Management’s report on the 2025 Annual Report and Accounts for purposes of Section
5:25c sub 2 Financial Supervision Act
The Managing Board certifies that, to the best of their knowledge:
•
the financial statements give a true and fair view, in all material respects, of the assets, liabilities, financial position and profit of
NWM N.V. Group and its consolidated entities; and
•
the Annual Report gives a true and fair view, in all material respects, of NWM N.V. Group and its consolidated entities as at 31
December 2025 and their state of affairs during 2025; and the 2025 Annual Report and Accounts describes the material risks that
NWM N.V. Group is facing.
Managing Board
Amsterdam, 17 February 2026
Financial statements
NatWest Markets N.V.
Annual Report and Accounts 2025
58
Page
Consolidated income statement
59
Consolidated statement of comprehensive income
59
Consolidated balance sheet
60
Consolidated statement of changes in equity
61
Consolidated cash flow statement
62
Accounting policies
63
Notes to the consolidated financial statements
1
Net interest income
68
2
Non-interest income
68
3
Operating expenses
69
4
Geographical segmental analysis
69
5
Auditor’s remuneration
69
6
Tax
70
7
Financial instruments - classification
72
8
Financial instruments - valuation
74
9
Financial instruments - maturity analysis
83
10
Trading assets and liabilities
85
11
Derivatives
85
12
Loan impairment provisions
90
13
Other financial assets
90
14
Other assets
91
15
Other financial liabilities
91
16
Subordinated liabilities
91
17
Other liabilities
91
18
Share capital and reserves
92
19
Structured entities
92
20
Asset transfers and collateral received
93
21
Capital resources
93
22
Memorandum items
94
23
Non-cash and other items
97
24
Analysis of changes in financing during the year
97
25
Analysis of cash and cash equivalents
98
26
Remuneration of the Managing Board and Supervisory Board
98
27
Related parties
99
28
Post balance sheet events
100
Parent company financial statements and notes
101
Other information
118
Consolidated income statement
for the year ended 31 December 2025
NatWest Markets N.V.
Annual Report and Accounts 2025
59
2025
2024
Note
€m
€m
Interest receivable
Interest payable
(256 )
(382 )
Net interest income
1
Fees and commissions receivable
Fees and commissions payable
(28 )
(29 )
Income from trading activities
Other operating income
(26 )
(47 )
Non-interest income
2
Total income
Staff costs
(94 )
(84 )
Premises and equipment
(6 )
(6 )
Other administrative expenses
(108 )
(85 )
Depreciation and amortisation
(2 )
(2 )
Operating expenses
3
(210 )
(177 )
Profit before impairment (losses)/releases
Impairment (losses)/releases
12
(5 )
Operating profit before tax
Tax credit
6
Profit for the year
Attributable to:
Ordinary shareholders
Paid-in equity holders
The appropriation of net profits pursuant to articles 37.2 and 37.3 of the Articles of Association includes the release from reserves of
all profits/(losses) attributable to controlling interests.
Consolidated statement of comprehensive income
for the year ended 31 December 2025
2025
2024
€m
€m
Profit for the year
Items that do not qualify for reclassification
Changes in fair value of financial liabilities designated at fair value through profit or loss (FVTPL) due to
changes in credit risk
(21 )
(27 )
Fair value through other comprehensive income (FVOCI) financial assets
(21 )
(25 )
Items that do qualify for reclassification
FVOCI financial assets
Cash flow hedges
(1)
(22 )
Currency translation
(4 )
(26 )
Other comprehensive losses after tax
(47 )
(21 )
Total comprehensive income for the year
Attributable to:
Ordinary shareholders
Paid-in equity holders
(1)
Refer to footnotes 2 and 3 of the Consolidated statement of changes in equity.
Consolidated balance sheet
as at 31 December 2025
NatWest Markets N.V.
Annual Report and Accounts 2025
60
2025
2024
Note
€m
€m
Assets
Cash and balances at central banks
7
Trading assets
10
Derivatives
11
Settlement balances
Loans to banks - amortised cost
7
Loans to customers - amortised cost
7
Amounts due from holding companies and fellow subsidiaries
7
Other financial assets
13
Other assets
14
Total assets
Liabilities
Bank deposits
7
Customer deposits
7
Amounts due to holding companies and fellow subsidiaries
7
Settlement balances
Trading liabilities
10
Derivatives
11
Other financial liabilities
15
Subordinated liabilities
16
Other liabilities
17
Total liabilities
Total equity
Total liabilities and equity
Consolidated statement of changes in equity
for the year ended 31 December 2025
NatWest Markets N.V.
Annual Report and Accounts 2025
61
2025
2024
€m
€m
Share capital and share premium - at 1 January and 31 December (1)
Paid-in equity - at 1 January
Redeemed
(250 )
Issued
At 31 December
FVOCI reserve- at 1 January
(3 )
Unrealised gains
Realised losses
At 31 December
Cash flow hedging reserve - at 1 January
Amount recognised in equity
(2)
(15 )
(12 )
Reclassification of OCI to P&L
(3)
(7 )
At 31 December
Foreign exchange reserve - at 1 January
Retranslation of net assets
(1 )
Recycled to profit or loss on disposal of businesses
(3 )
At 31 December
Retained earnings - at 1 January
Profit attributable to ordinary shareholders and other equity owners
Paid-in equity dividends paid
(16 )
(24 )
Ordinary dividends paid
(72 )
Changes in fair value of financial liabilities designated at FVTPL due to changes in credit risk
(21 )
(27 )
At 31 December
Total equity at 31 December
Attributable to:
Ordinary shareholders
Paid-in equity holders
(1)
Includes Ordinary share capital of €50,004 (2024 - €50,004 ) – Refer to Note 18 for further details.
(2)
The change in the cash flow hedging reserve is driven by realised accrued interest transferred into the income statement and an increase in swap rates in the year. The portfolio of
hedging instruments are predominantly receive fixed swaps.
(3)
The amount transferred from equity to the income statement is mostly recorded within net interest income mainly within balances at central banks. Refer to Note 11.
Consolidated cash flow statement
for the year ended 31 December 2025
NatWest Markets N.V.
Annual Report and Accounts 2025
62
2025
2024
Note
€m
€m
Cash flows from operating activities
Operating profit before tax
Adjustments for:
Non-cash and other items
23
(31 )
(167 )
Changes in operating assets and liabilities
23
(16 )
(3,139 )
Income taxes paid
(12 )
(2 )
Net cash flows from operating activities
(1)
(3,183 )
Cash flows from investing activities
Sale and maturity of other financial assets
Purchase of other financial assets
(942 )
(775 )
Income received on other financial assets
Sale of property and equipment
Purchase of property and equipment
(1 )
Net cash flows from investing activities
Cash flows from financing activities
Interest paid on subordinated liabilities
24
(8 )
(12 )
Dividends paid
(16 )
(96 )
Net cash flows from financing activities
(24 )
(108 )
Effects of exchange rate changes on cash and cash equivalents
(52 )
Net increase/(decrease) in cash and cash equivalents
(2,592 )
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
(2)
25
(1)
Includes interest received of €346 million (2024 - €517 million) and interest paid of €254 million (2024 - €388 million).
(2)
Cash and cash equivalents comprise loans and advances due from the holding company and fellow subsidiaries with an original maturity of less than three months for 2025 and 2024.
Accounting policies
NatWest Markets N.V.
Annual Report and Accounts 2025
63
registered at Claude Debussylaan 94, 1082 MD Amsterdam, the
principally in Europe.
subsidiary of Natwest Markets Plc (NWM Plc), and NWM Plc is
owned by NatWest Group plc . NatWest Group plc is
incorporated in the UK and registered at 36 St. Andrew Square,
Edinburgh, Scotland. NatWest Group plc is our ultimate parent
company.
consolidated financial statements of NatWest Group plc. Our
consolidated financial statements incorporate financial
information of NWM N.V. and the entities it controls. Control is
assessed by reference to our ability to enforce our will on the
other entity, typically through voting rights. The consolidated
financial statements are prepared under consistent accounting
authorised for issue by the Managing Board on 17 February
2026 and by the Supervisory Board on 17 February 2026. The
right to request an amendment of the financial statements is
embedded in the Netherlands Civil Code. Interested parties have
the right to ask the Enterprise Chamber of the Amsterdam
considered appropriate, including: a review of our activities,
forecasts, projections and other relevant evidence regarding the
continuing availability of sufficient resources from NatWest Group
have prepared the financial statements on a going concern basis
based on the directors’ assessment that we will continue in
operational existence for a period of twelve months from the
financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union. The financial statements are presented in
The audited financial statements include these accounting
policies, the accompanying notes to the financial statements on
pages 68 to 100 and the audited sections of the Risk and capital
management section on pages 9 to 48 which together form an
integral part of the primary financial statements
The critical and material accounting policies and related
judgments are set out below.
The financial statements are presented on a historical cost basis
except for certain financial instruments which are stated at fair
value.
The effect of the amendments to IFRS Accounting Standards
effective from 1 January 2025 on our financial statements was
immaterial.
In 2021, the OECD published the Global Anti-Base Erosion Model
Rules (Pillar 2). These rules will impose a top-up tax on the
profits of subsidiaries that are taxed at an effective tax rate of
less than 15 per cent. In the absence of an enacted Qualifying
Domestic Minimum Top Up Tax (“QDMTT”), any top-up tax
arising will be borne by NatWest Group plc, in the United
Kingdom.
NWM N.V. Group has applied the exception from the accounting
requirements for deferred taxes in IAS 12. Accordingly, the
NWM N.V. Group has not recognised or disclosed information
about deferred tax assets and liabilities related to Pillar 2 income
taxes.
estimates
Business planning
Key financial estimates are based on management's latest five-
year revenue and cost forecasts. The outputs from this forecast
affect forward-looking accounting estimates. In 2023, our
scenario planning was enhanced by the further integration of
NatWest Group’s climate transition plan, including the
assessment of climate-related risks and opportunities. There
remains uncertainty regarding a policy response of the Dutch
government and the EU, including the effect of wider geo-
political uncertainty on governmental ambitions regarding
climate transition and the effect of decarbonisation on wider
economic growth, technology development and customer
behaviours.
Information used in accounting estimates
We make use of reasonable and supportable information to
make accounting judgements and estimates. This includes
information about the observable effects of the physical and
transition risks of climate change on the current
creditworthiness of borrowers, asset values and market
indicators. Many of the effects arising from climate change will
be longer term in nature, with an inherent level of uncertainty,
and have limited effect on accounting judgements and estimates
for the current period including the deferred tax assets
recognised. Some physical and transition risks can manifest in
the shorter term. The following items represent the most
significant effects:
•
Classification of financial instruments linked to climate, or
other sustainability indicators. Consideration is given to
whether the effect of climate-related terms prevent the
instrument cashflows being solely payments of principal and
interest.
•
The use of market indicators as inputs to fair value is
assumed to include current information and knowledge
regarding the effect of climate risk.
•
We are monitoring the effect of the physical and transition
consequences of climate change on our experience of loan
loss. Our assessment of sector-specific risks, and whether
additional adjustments are required, includes expectations of
the ability of those sectors to meet their financing needs in
the market. Changes in credit stewardship and credit risk
appetite that stem from climate transition policies may
Accounting policies continued
NatWest Markets N.V.
Annual Report and Accounts 2025
64
The judgments and assumptions involved in our accounting policies that are considered by the Board to be the most important to the
portrayal of our financial condition are noted below. The use of estimates, assumptions or models that differ from those adopted by us
would affect our reported results. Management’s consideration of uncertainty is outlined in the relevant sections.
Information used for significant estimate | |||
Further | |||
Policy | Judgment | Estimate | information |
Deferred tax | Determination of whether sufficient sustainable | Our estimates are based on the seven-year | Note 6 |
taxable profits will be generated in future years | revenue and cost forecasts (which include | ||
to recover the deferred tax asset. | inherent uncertainties). | ||
Fair value- | Classification of a fair value instrument as level 3, | Estimation of the fair value, where it is | Note 8 |
financial | where the valuation is driven by unobservable | reasonably possible to have alternative | |
instruments | inputs. | assumptions in determining the FV. |
Deferred tax is the estimated tax expected to be payable or
recoverable in respect of temporary differences between the
carrying amount of an asset or liability for accounting purposes
and the carrying amount for tax purposes in the future.
Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to
the extent their recovery is probable.
Deferred tax is calculated using tax rates expected to apply in
the periods when the assets will be realised or the liabilities
settled, based on tax rates and laws enacted, or substantively
enacted, at the balance sheet date.
Deferred tax asset recoverability is based on the level of
supporting offsetable deferred tax liabilities we have and of our
future taxable profits. These future taxable profits are based on
our seven-year revenue and cost forecasts, whereas previously
five-year forecasts were used. The seven-year forecast takes
account of management’s current expectations of
profitability, sustained operational continuity and NWM N.V.’s
strengthened strategic role. Management considers a seven-
year horizon to provide a more appropriate basis for assessing
probable taxable profits than a five-year period, based on
cumulative performance evidence. See Note 6 for further
We measure financial instruments at fair value when they are
classified as mandatory fair value through profit or loss; held-for-
trading; designated fair value through profit or loss and fair
value through other comprehensive income and they are
recognised in the financial statements at fair value. All
derivatives are measured at fair value.
We manage some portfolios of financial assets and financial
liabilities based on our net exposure to either market or credit
risk. In these cases, the fair value is derived from the net risk
exposure of that portfolio with portfolio level adjustments applied
to incorporate bid-offer spreads, counterparty credit risk, and
funding costs (see ‘Valuation Adjustments’).
Where the market for a financial instrument is not active, fair
value is established using a valuation technique. These valuation
techniques involve a degree of estimation, the extent of which
depends on the instrument’s complexity and the availability of
market-based data. The complexity and uncertainty in the
financial instrument’s fair value is categorised using the fair
value hierarchy.
The use of market indicators as inputs to fair value is assumed
to include current information and knowledge regarding the
4. Material accounting policies
Interest receivable and payable are recognised in the income
statement using the effective interest rate method: for all
financial instruments measured at amortised cost; debt
instruments measured as fair value through other
comprehensive income; and the effective part of any related
accounting hedging instruments.
value is recognised as part of the movement in fair value and is
reported in income from trading activities or other operating
income as relevant. Fees in respect of services are recognised
as the right to consideration accrues through the performance
of each distinct service obligation to the customer. The
arrangements are generally contractual and the cost of
providing the service is incurred as the service is rendered. The
Employee costs, such as salaries, paid absences, and other
benefits are recognised over the period in which the employees
provide the related services to us. Employees may receive
variable compensation in cash, in deferred cash or debt
instruments of NWM Group or in ordinary shares of NatWest
Group plc subject to deferral, clawback and forfeiture criteria.
We operate a number of share-based compensation schemes
under which we grant awards of NatWest Group plc shares and
share options to our employees. Such awards are subject to
vesting conditions.
Contributions to defined contribution pension schemes are
4. Material accounting policies continued
Accounting policies continued
NatWest Markets N.V.
Annual Report and Accounts 2025
65
Foreign exchange differences arising on the settlement of
foreign currency transactions and from the translation of
monetary assets and liabilities are reported in income from
trading activities except for differences arising on cash flow
hedges.
Non-monetary items denominated in foreign currencies that are
stated at fair value are translated into the functional currency at
the foreign exchange rates ruling at the dates the values are
determined. Translation differences are recognised in the income
statement except for differences arising on non-monetary
financial assets classified as fair value through other
Income and expenses of foreign subsidiaries and branches are
translated into euro at average exchange rates unless these do
not approximate the foreign exchange rates ruling at the dates
of the transactions. Foreign exchange differences arising on the
translation of a foreign operation are recognised in other
comprehensive income. The amount accumulated in equity is
reclassified from equity to the income statement on disposal of a
We recognise a provision for a present obligation resulting from
a past event when it is more likely than not that we will be
required to pay to settle the obligation and the amount of the
obligation can be estimated reliably.
Provision is made for restructuring costs, including the costs of
redundancy, when we have a constructive obligation. An
obligation exists when we have a detailed formal plan for the
restructuring and have raised a valid expectation in those
affected.
We recognise any onerous cost of the present obligation under a
contract as a provision. An onerous cost is the unavoidable cost
of meeting our contractual obligations that exceed the expected
economic benefits. When we intend to vacate a leasehold
property or right of use asset, the asset would be tested for
impairment and a provision may be recognised for the ancillary
Tax encompassing current tax and deferred tax is recognised in
the income statement except when taxable items are
recognised in other comprehensive income or equity. Tax
consequences arising from servicing financial instruments
classified as equity are recognised in the income statement.
Accounting for taxes is judgmental and carries a degree of
uncertainty because tax law is subject to interpretation, which
might be questioned by the relevant tax authority. We recognise
the most likely current and deferred tax liability or asset,
assessed for uncertainty using consistent judgments and
estimates. Current and deferred tax assets are only recognised
where their recovery is deemed probable, and current and
deferred tax liabilities are recognised at the amount that
represents the best estimate of the probable outcome having
Financial instruments are measured at fair value on initial
recognition on the balance sheet.
Monetary financial assets are classified into one of the following
subsequent measurement categories (subject to business model
assessment and review of contractual cash flow for the
purposes of sole payments of principal and interest where
•
amortised cost
measured at cost using the effective interest
rate method, less any impairment allowance;
•
fair value through other comprehensive income (FVOCI)
measured at fair value, using the effective interest rate
method and changes in fair value through other
comprehensive income;
mandatory fair value through profit or loss (MFVTPL)
measured at fair value and changes in fair value reported in
the income statement; or
designated at fair value through profit or loss (DFV)
(held for
trading)
measured at fair value and changes in fair value
reported in the income statement.
Classification by business model reflects how we manage our
financial assets to generate cash flows. A business model
assessment helps to ascertain the measurement approach
depending on whether cash flows result from holding financial
assets to collect the contractual cash flows, from selling those
financial assets, or both.
Business model assessment of assets is made at portfolio level,
being the level at which they are managed to achieve a
predefined business objective. This is expected to result in the
most consistent classification of assets because it aligns with the
stated objectives for the portfolio, its risk management,
manager’s remuneration and the ability to monitor sales of
assets from a portfolio. When a significant change to our
business is communicated to external parties, we reassess our
business model for managing those financial assets. We
reclassify financial assets if we have a significant change to the
business model. A reclassification is applied prospectively from
the reclassification date.
The contractual terms of a financial asset; any leverage
features; prepayment and extension terms; and discounts or
penalties to interest rates that are part of meeting
environmental, social and governance targets as well as other
contingent and leverage features, non-recourse arrangements
and features that could modify the timing and/or amount of the
contractual cash flows that might reset the effective rate of
interest; are considered in determining whether cash flows are
solely payments of principal and interest.
Certain financial assets may be designated at fair value through
profit or loss (DFV) upon initial recognition if such designation
Equity shares are measured at fair value through profit or loss
unless specifically elected as at fair value through other
comprehensive income (FVOCI).
Upon disposal, the cumulative gains or losses in fair value
through other comprehensive income reserve are recycled to
the income statement for monetary assets and for non-
monetary assets (equity shares) the cumulative gains or losses
are transferred directly to retained earnings.
4. Material accounting policies continued
Accounting policies continued
NatWest Markets N.V.
Annual Report and Accounts 2025
66
amortised cost are recognised on the settlement date; all other
regular way transactions in financial assets are recognised on
•
amortised cost
measured at cost using the effective interest
rate method;
held for trading
measured at fair value and changes in fair
value reported in income statement; or
designated at fair value through profit or loss
measured at
fair value and changes in fair value reported in the income
statement except changes in fair value attributable to the
credit risk component recognised in other comprehensive
Under a financial guarantee contract, we, in return for a fee,
undertake to meet a customer’s obligations under the terms of a
debt instrument if the customer fails to do so. A financial
guarantee not designated as fair value through profit or loss is
recognised as a liability; initially at fair value and subsequently at
the higher of its initial value less cumulative amortisation and any
provision under the contract measured in accordance with our
Purchased financial guarantees are considered to be integral,
and fully adjust the covered debt instrument expected credit loss
provision, only where the guarantee is contemplated at the
inception of the debt instrument and is entered into within a
reasonable timeframe.
Amortisation is calculated to recognise fees receivable in the
income statement over the period of the guarantee. A separate
asset is recognised in respect of fees receivable for provision of
Financial assets and financial liabilities are offset, and the net
amount presented on the balance sheet when, and only when,
we currently have a legally enforceable right to set off the
recognised amounts and we intend either to settle on a net basis
or to realise the asset and settle the liability simultaneously. We
are party to a number of arrangements, including master netting
agreements, that give us the right to offset financial assets and
financial liabilities, but where we do not intend to settle the
amounts net or simultaneously, the assets and liabilities
We classify a financial instrument that we issue as a liability if it
is a contractual obligation to deliver cash or another financial
asset, or to exchange financial assets or financial liabilities on
potentially unfavourable terms and as equity if we evidence a
residual interest in our assets after the deduction of liabilities.
Incremental costs and related tax that are directly attributable
Derivatives are reported on the balance sheet at fair value. We
use derivatives as part of our trading activities, or to manage
our own risk such as interest rate, foreign exchange, or credit
risk or in certain customer transactions. Not all derivatives used
to manage risk are in hedge accounting relationships (an IFRS
method to reduce accounting mismatch from changes in the fair
value of derivatives reported in the income statement).
Gains and losses arising from changes in the fair value of
derivatives that are not in hedge relationships are recognised in
Income from trading activities unless those derivatives are
managed together with financial instruments designated at fair
value; these gains and losses are included in Other operating
income.
Hedge accounting relationships are designated and documented
at inception in line with the requirements of IAS 39 Financial
instruments – Recognition and Measurement. The
documentation identifies the hedged item, the hedging
instrument and details of the risk that is being hedged and the
way in which effectiveness will be assessed at inception and
during the period of the hedge. When designating a hedging
relationship, we consider: the economic relationship between the
hedged item (including the risk being hedged) and the hedging
instrument; the nature of the risk; the risk management
objective and strategy for undertaking the hedge; and the
appropriateness of the method that will be used to assess hedge
effectiveness.
Designated hedging relationships must be expected to be highly
effective both on a prospective and retrospective basis. This is
assessed using regression techniques which model the degree of
offsetting between the changes in fair value or cash flows
attributable to the hedged risk and the changes in fair value of
the designated hedging derivatives. Ineffectiveness is measured
based on actual levels of offsetting and recognised in the income
statement.
Cash flow hedge
The effective portion of the designated hedge relationship is
recognised in other comprehensive income and the ineffective
portion in the income statement. When the hedged item
(forecasted cash flows) results in the recognition of a financial
asset or financial liability, the cumulative gain or loss is
reclassified from equity to the income statement in the same
periods in which the hedged forecasted cash flows affect the
income statement.
Discontinuation of hedge accounting
Hedge accounting is discontinued if the hedge no longer meets
the criteria for hedge accounting i.e., the hedge is not highly
effective in offsetting changes in fair value or cash flows
attributable to the hedged risk, consistent with the documented
risk management strategy; the hedging instrument expires or is
sold, terminated or exercised; or if hedge designation is revoked.
For cash flow hedging the cumulative unrealised gain or loss is
reclassified from equity to the income statement when the
hedged cash flows occur or, if the forecast transaction results in
the recognition of a financial asset or financial liability, when the
hedged forecast cash flows affect the income statement. Where
a forecast transaction is no longer expected to occur, the
cumulative unrealised gain or loss is reclassified from equity to
4. Material accounting policies continued
NatWest Markets N.V.
Annual Report and Accounts 2025
67
Accounting policies continued
losses (ECL)
At each balance sheet date each financial asset or portfolio of
financial assets measured at amortised cost or at fair value
through other comprehensive income, issued financial guarantee
and loan commitment (other than those classified as held for
trading) is assessed for impairment. Any change in impairment is
reported in the income statement.
Loss allowances are forward-looking, based on 12-month ECL
where there has not been a significant increase in credit risk
rating, otherwise allowances are based on lifetime expected
losses.
ECL is a probability-weighted estimate of credit losses. The
probability is determined by the risk of default which is applied to
the cash flow estimates. In the absence of a change in credit
rating, allowances are recognised when there is a reduction in
the net present value of expected cash flows. Following a
significant increase in credit risk, ECL is adjusted from 12
months to lifetime. This will lead to a higher impairment charge.
The measurement of expected credit loss considers the ability of
borrowers to make payments as they fall due. Future cashflows
are discounted, so long dated cashflows are less likely to affect
current expectations on credit loss. Our assessment of sector-
specific risks, and whether additional adjustments are required,
include expectations of the ability of those sectors to meet their
financing needs in the market. Changes in credit stewardship
and credit risk appetite that stem from climate transition policies
may directly affect our positions.
Judgment is exercised as follows:
Non-modelled portfolios
– under IFRS 9, there are bespoke
treatments for the identification of significant increase in credit
risk. Benchmark PDs, EADs and LGDs are reviewed annually for
appropriateness. The ECL calculation is based on expected
future cash flows, which is typically applied at a portfolio level.
Multiple economic scenarios (MES)
– the central, or base,
scenario is most critical to the ECL calculation, independent of
the method used to generate a range of alternative outcomes
and their probabilities.
Significant increase in credit risk
- IFRS 9 requires that at each
reporting date, an entity shall assess whether the credit risk on
an account has increased significantly since initial recognition.
Part of this assessment requires a comparison to be made
between the current lifetime PD (i.e., the current probability of
default over the remaining lifetime) with the equivalent lifetime
PD as determined at the date of initial recognition.
On restructuring where a financial asset is not derecognised, the
revised cash flows are used in re-estimating the credit loss.
Where restructuring causes derecognition of the original financial
asset, the fair value of the replacement asset is used as the
closing cash flow of the original asset.
Where, in the course of the orderly realisation of a loan, it is
exchanged for equity shares or property, the exchange is
accounted for as the sale of the loan and the acquisition of
equity securities or investment property. Where our acquired
interest is in equity shares relevant polices for control, associates
and joint ventures apply.
Impaired financial assets are written off and therefore
derecognised from the balance sheet when we conclude that
there is no longer any realistic prospect of recovery of part, or
all, of the loan. For financial assets that are individually assessed
for impairment, the timing of the write-off is determined on a
case-by-case basis. Such financial assets are reviewed regularly,
and write-off will be prompted by bankruptcy, insolvency, re-
negotiation, and similar events.
Uncollateralised impaired business loans
are generally written off
International Financial Reporting Standards
Effective 1 January 2026
Amendments to the Classification and Measurement of Financial
Instruments (Amendments to IFRS 9 and IFRS 7 – Issued May
2024).
Effective 1 January 2027
Presentation and Disclosures in Financial Statements (IFRS 18 –
Issued April 2024).
Subsidiaries without Public Accountability (IFRS 19 – Issued May
2024).
We are assessing the effect of adopting the accounting
developments effective from 1 January 2027 on our financial
statements and have largely completed a similar assessment for
the Amendments to IFRS 9 and IFRS 7 effective from 1 January
2026. We do not expect any to have a material impact on our
financial performance or position, although IFRS 18 may
have
Notes to the consolidated financial statements
NatWest Markets N.V.
Annual Report and Accounts 2025
68
2025 | 2024 | |
€m | €m | |
Balances at central banks and loans to banks | 204 | 309 |
Loans and advances to customers | 55 | 58 |
Amounts due from holding companies and fellow subsidiaries | 5 | 3 |
Other financial assets | 67 | 132 |
Interest receivable | 331 | 502 |
Bank deposits | 22 | 19 |
Customer deposits | 120 | 187 |
Amounts due to holding companies and fellow subsidiaries | 36 | 50 |
Subordinated liabilities | 1 | 1 |
Other financial liabilities | 77 | 125 |
Interest payable | 256 | 382 |
Net interest income | 75 | 120 |
Interest income on financial instruments measured at amortised cost, debt instruments classified as FVOCI and the interest element of
the effective portion of any designated hedging relationships are measured using the effective interest rate method, which allocates
the interest income or interest expense over the expected life of the asset or liability at the rate that exactly discounts all estimated
future cash flows to equal the instrument's initial carrying amount. Calculation of the effective interest rate takes into account fees
payable or receivable that are an integral part of the instrument's yield, premiums or discounts on acquisition or issue, early
redemption fees and transaction costs. All contractual terms of a financial instrument are considered when estimating future cash
flows. Interest income on financial assets is presented in interest receivable, interest expense on financial liabilities is presented in
interest payable.
2025 | 2024 | |
€m | €m | |
Fees and commissions receivable | ||
- Lending and financing | 19 | 25 |
- Underwriting fees | 66 | 60 |
- Other (1) | 157 | 151 |
Total | 242 | 236 |
Fees and commissions payable | (28) | (29) |
Net fees and commissions | 214 | 207 |
Interest rate | 40 | 21 |
Income from trading activities | 40 | 21 |
Changes in the fair value of financial assets and liabilities designated | ||
at fair value through profit or loss | (32) | (40) |
Other income | 6 | (7) |
Other operating income | (26) | (47) |
Non-interest income | 228 | 181 |
(1)
Net fees and commissions - other includes transfer pricing income from NWM Plc (in the UK) of €156 million (2024 – €153 million), refer to Note 27 for further details.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
69
2025 | 2024 | |
€m | €m | |
Staff costs | 93 | 82 |
Temporary and contract costs | 1 | 2 |
Premises and equipment | 6 | 6 |
Other administrative expenses (1,2) | 110 | 87 |
Operating expenses | 210 | 177 |
(1)
Includes €66 million (2024 - €53 million) recharges from other NatWest Group entities, mainly NatWest Bank Plc which provides the majority of shared services (including
technology) and operational processes.
(2)
Includes depreciation and amortisation.
For accounting policy information refer to Accounting policy 4.2.
There were 255 people employed at 31 December 2025 (2024 – 253). The average number of persons employed during the year was
254 (2024 – 249).
NWM N.V. Group is managed as a single reportable segment.
The geographical analyses in the tables below have been compiled on the basis of location of office where the transactions are
recorded.
Netherlands | RoW | Total | |
2025 | €m | €m | €m |
Interest receivable | 331 | - | 331 |
Interest payable | (256) | - | (256) |
Net fees and commissions | 118 | 96 | 214 |
Income from trading activities (dealing profits) | 36 | 4 | 40 |
Other operating income | (26) | - | (26) |
Total income | 203 | 100 | 303 |
Operating profit before tax | 73 | 15 | 88 |
Total assets | 28,239 | 242 | 28,481 |
Total liabilities | 26,187 | 181 | 26,368 |
Contingent liabilities and commitments (1) | 8,146 | - | 8,146 |
2024 | |||
Interest receivable | 500 | 2 | 502 |
Interest payable | (382) | - | (382) |
Net fees and commissions | 117 | 90 | 207 |
Income from trading activities (dealing profits) | 16 | 5 | 21 |
Other operating income | (41) | (6) | (47) |
Total income | 210 | 91 | 301 |
Operating profit before tax | 108 | 17 | 125 |
Total assets | 29,897 | 297 | 30,194 |
Total liabilities | 27,970 | 181 | 28,151 |
Contingent liabilities and commitments (1) | 7,470 | - | 7,470 |
(1)
Amounts payable to NWM N.V. Group’s auditors for statutory audit and audit related services are set out below.
2025 | 2024 | |
€m | €m | |
Fees for the audit of NWM N.V. Group's annual accounts | 1.7 | 1.5 |
Audit related services (1) | 1.0 | 1.0 |
Total audit and audit related services | 2.7 | 2.5 |
(1)
Fees incurred in relation to regulatory audits and statutory audits of subsidiaries and branches.
Total fees of EY Accountants B.V. in the Netherlands, charged to NWM N.V. and its consolidated group entities amounted to
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
70
2025 | 2024 | |
€m | €m | |
Current tax | ||
Charge for the year | (6) | (6) |
(Under)/over provision in respect of prior years | (1) | 1 |
(7) | (5) | |
Deferred tax | ||
Charge for the year | (16) | (17) |
Increase in the carrying value of deferred tax assets in respect of tax losses and tax credits | 68 | 53 |
Other provision in respect of prior years | - | 3 |
Tax credit for the year | 45 | 34 |
The actual tax charge differs from the expected tax charge computed by applying the statutory tax rate of the Netherlands of 25.8%
as follows:
2025 | 2024 | |
€m | €m | |
Expected tax charge | (23) | (32) |
Non-taxable items | (2) | (1) |
Foreign profits taxed at other rates | (1) | (1) |
Losses in year not recognised | - | (1) |
Tax on paid-in equity dividends | 4 | 6 |
Losses brought forward and utilised | - | 6 |
Increase in the carrying value of deferred tax assets in respect of tax losses and tax credits | 68 | 53 |
Adjustments in respect of prior years (1) | (1) | 4 |
Actual tax credit | 45 | 34 |
(1)
Prior period tax adjustments include, tax provision movements, adjustments to reflect submitted tax computations in the Netherlands and overseas, and recovery of previously written-off
current tax assets.
For accounting policy information refer to Accounting policies 3.1 and 4.5.
2025 | 2024 | |
€m | €m | |
Deferred tax asset | (154) | (103) |
Deferred tax liability | 2 | 3 |
Net deferred tax asset | (152) | (100) |
Tax losses carried | |||
forward | Other | Total | |
€m | €m | €m | |
At 1 January 2024 | (63) | 2 | (61) |
Credit to income statement | (37) | (2) | (39) |
At 1 January 2025 | (100) | - | (100) |
Credit to income statement | (51) | (1) | (52) |
At 31 December 2025 | (151) | (1) | (152) |
Deferred tax assets in respect of unused tax losses and tax credits are recognised only when they can be utilised to offset probable
future taxable profits, after considering the expected reversal of other temporary differences.
The deferred tax asset of €154 million as at 31 December 2025
(2024 - €103 million) principally comprises tax losses which arose
in the Netherlands, Dutch tax credits, and temporary differences.
These deferred tax assets are recognised to the extent that it is
probable future taxable profits will be available to recover them.
Judgment
-
NWM N.V. Group has considered the carrying value
of deferred tax assets and management considers that sufficient
sustainable taxable profits will be generated in future years to
recover the recognised deferred tax asset.
-
These estimates are partly based on forecast
performance. They have regard to inherent uncertainties. NWM
N.V. Group considers it to be probable, based on its seven-year
budget forecast, that future taxable profit will be available
against which the tax losses and tax credits can be partially
utilised.
-
The €51 million increase in
recognised deferred tax assets in respect of unused tax losses
and tax credits, compared with 2024, is mainly due to
an
extension of the forecast period from five to seven years, which
resulted in an incremental recognition of approximately
€41
million. The extension reflects a longer track record of stable
profitability, sustained operational continuity and NWM N.V.’s
strengthened strategic role. Management considers a seven-year
horizon to provide a more appropriate basis for assessing
probable taxable profits than a five-year period, based on
cumulative performance evidence.
The asset transfers from NWBE to NWM N.V. during the year
increased forecast taxable profits over the forecast horizon and
were reflected in the level of deferred tax assets recognised as at
31
December
2025. Further details regarding the NWBE transfers
are provided in Note
27 Related parties.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
71
6 Tax continued
The carrying amount of deferred tax assets is sensitive to certain
significant assumptions made in management’s assessment. Key
assumptions include:
•
The seven-year forecast period;
•
The future macro-economic environment of NWM N.V.;
•
Transfer pricing model parameters;
•
Decisions within NWM N.V.’s strategy, including the impact of
CRD
VI;
•
Expected credit losses;
•
Dutch tax law.
NWM N.V. Group’s evaluation of alternative assumptions
revealed that the recognition of the deferred tax asset is highly
sensitive to the significant assumptions used in the assessment
and therefore subject to high estimation uncertainty. Due to
uncertainty in forecasts of probable taxable income, the ultimate
utilisation of the deferred tax asset may vary significantly, which
could result in a material increase or decrease in the recognised
Dutch tax law
The corporate income tax rate is 25.8% in 2025 (2024 - 25.8%).
On 19 December 2024 the government of the Netherlands
enacted Pillar Two income tax legislation effective from 31
December 2024. Pillar Two aims to ensure that large
multinational groups pay at least at a minimum rate of 15
percent on income arising in each jurisdiction in which they
operate by applying a system of top-up taxes. No additional tax
liability is expected for NWM N.V. Group.
Dutch tax losses
Tax losses can be carried forward indefinitely pursuant to Dutch
tax law. Annual utilisation is limited: taxable profit up to €1 million
can be fully offset against carried-forward tax losses from prior
years, and excess profit can only be reduced by up to 50%.
NWM N.V. Group’s tax losses principally arose from the run-
down of its legacy business between 2013 and 2017.
Dutch tax credits
Under Dutch tax law, taxable profit can be fully offset against
available tax credits.
NWM N.V. Group’s Dutch tax credits relate to foreign profits
earned before 2012. In taxable years prior to 2012, Dutch
resident corporate taxpayers were fully liable for Dutch
corporate income tax on worldwide income, including income
derived from foreign permanent establishments. Double taxation
was mitigated through a tax reduction for income attributable to
the foreign permanent establishment. Foreign profits that could
not be exempted because no attributable Dutch corporate
income tax was due were carried forward for use in a later year.
Since 2012, income (gains and losses) arising from foreign
permanent establishments is generally exempt from Dutch
corporate income tax (object exemption). Pre-2012 carried-
forward foreign profits remain available to eliminate double
taxation in 2012 and subsequent years.
Deferred tax assets
-
As at 31 December 2025, a deferred tax
asset of €151 million (2024 - €100 million) has been recognised in
respect of tax losses and tax credits to be carried forward of
€585 million 31 December 2025 (2024 - €387 million).
Unrecognised deferred tax
-
As at 31 December 2025, deferred
tax assets of €637 million (2024 - €705 million) have not been
recognised in respect of tax losses and unused tax credits of
€2,469 million (2024 - €2,731 million). These tax losses and tax
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
72
Classification of financial assets between amortised cost and fair value through other comprehensive income requires a degree of
judgment in respect of business models and contractual cashflows.
•
The business model criteria are assessed at a portfolio level to determine whether assets are classified as held to collect or held to
collect and sell. Information that is considered in determining the applicable business model includes: the portfolio’s policies and
objectives; how the performance and risks of the portfolio are managed, evaluated and reported to management; and the
frequency, volume and timing of sales in prior periods, sales expectation for future periods, and the reasons for sales.
•
The contractual cash flow characteristics of financial assets are assessed with reference to whether the cash flows represent solely
payments of principal and interest (SPPI). A level of judgment is made in assessing terms that could change the contractual cash
flows so that it would not meet the condition for SPPI, including contingent and leverage features,
non-recourse arrangements and
For accounting policy information refer to Accounting policies 4.6, 4.8 and 4.10.
in IFRS 9.
Amortised | Other | ||||
MFVTPL | FVOCI | cost | assets | Total | |
Assets | €m | €m | €m | €m | €m |
Cash and balances at central banks | 7,608 | 7,608 | |||
Trading assets | 6,509 | 6,509 | |||
Derivatives | 8,791 | 8,791 | |||
Settlement balances | 111 | 111 | |||
Loans to banks - amortised cost (1) | 613 | 613 | |||
Loans to customers - amortised cost | 1,422 | 1,422 | |||
Amounts due from holding companies and fellow subsidiaries | 821 | - | 450 | 22 | 1,293 |
Other financial assets | - | 695 | 1,264 | 1,959 | |
Other assets | 175 | 175 | |||
31 December 2025 | 16,121 | 695 | 11,468 | 197 | 28,481 |
Cash and balances at central banks | 6,187 | 6,187 | |||
Trading assets | 6,688 | 6,688 | |||
Derivatives | 11,860 | 11,860 | |||
Settlement balances | 866 | 866 | |||
Loans to banks - amortised cost (1) | 225 | 225 | |||
Loans to customers - amortised cost | 935 | 935 | |||
Amounts due from holding companies and fellow subsidiaries | 1,111 | - | 76 | 16 | 1,203 |
Other financial assets | 1 | 595 | 1,515 | 2,111 | |
Other assets | 119 | 119 | |||
31 December 2024 | 19,660 | 595 | 9,804 | 135 | 30,194 |
Held-for- | Amortised | Other | |||
trading | DFV | cost | liabilities | Total | |
Liabilities | €m | €m | €m | €m | €m |
Bank deposits (2) | 975 | 975 | |||
Customer deposits | 4,968 | 4,968 | |||
Amounts due to holding company and fellow subsidiaries | 1,171 | - | 913 | 27 | 2,111 |
Settlement balances | 182 | 182 | |||
Trading liabilities | 6,751 | 6,751 | |||
Derivatives | 7,331 | 7,331 | |||
Other financial liabilities | - | 1,137 | 2,542 | 3,679 | |
Subordinated liabilities (3) | 271 | 19 | 290 | ||
Other liabilities (4) | 7 | 74 | 81 | ||
31 December 2025 | 15,253 | 1,408 | 9,606 | 101 | 26,368 |
Bank deposits (2) | 597 | 597 | |||
Customer deposits | 2,999 | 2,999 | |||
Amounts due to holding company and fellow subsidiaries | 1,218 | - | 1,310 | 30 | 2,558 |
Settlement balances | 685 | 685 | |||
Trading liabilities | 7,061 | 7,061 | |||
Derivatives | 10,510 | 10,510 | |||
Other financial liabilities | - | 840 | 2,528 | 3,368 | |
Subordinated liabilities (3) | 281 | 22 | 303 | ||
Other liabilities (4) | 9 | 61 | 70 | ||
31 December 2024 | 18,789 | 1,121 | 8,150 | 91 | 28,151 |
(1)
Includes items in the course of collection from other banks of €27 million (2024 - €19 million).
(2)
Includes items in the course of transmission to other banks of €18 million (2024 - €5 million).
(3)
The cumulative own credit adjustment, representing a reduction of the subordinated liability value, was €16 million (2024 - €16 million).
(4)
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
73
7 Financial instruments – classification continued
The tables below present information on financial assets and liabilities that are offset in the balance sheet under IFRS or subject to
enforceable master netting agreements together with financial collateral received or given.
Instruments which can be offset | Potential for offset not recognised by IFRS | ||||||||
Net amount | |||||||||
after effect of | |||||||||
Effect of | netting | ||||||||
master netting | agreements | Instruments | |||||||
and similar | Securities | and related | outside netting | Balance sheet | |||||
Gross | IFRS offset | Balance sheet | agreements | Cash collateral | collateral | collateral | agreements | total | |
2025 | €m | €m | €m | €m | €m | €m | €m | €m | €m |
Derivative assets | 17,226 | (8,471) | 8,755 | (4,887) | (2,995) | (621) | 252 | 36 | 8,791 |
Derivative liabilities | 17,041 | (9,802) | 7,239 | (4,887) | (1,698) | (352) | 302 | 92 | 7,331 |
Net position (1) | 185 | 1,331 | 1,516 | - | (1,297) | (269) | (50) | (56) | 1,460 |
Trading reverse repos | 5,470 | (855) | 4,615 | (156) | - | (4,459) | - | 15 | 4,630 |
Trading repos | 5,279 | (855) | 4,424 | (156) | - | (4,268) | - | - | 4,424 |
Net position | 191 | - | 191 | - | - | (191) | - | 15 | 206 |
2024 | |||||||||
Derivative assets | 20,822 | (9,006) | 11,816 | (7,875) | (2,550) | (886) | 505 | 44 | 11,860 |
Derivative liabilities | 20,731 | (10,312) | 10,419 | (7,875) | (1,947) | (117) | 480 | 91 | 10,510 |
Net position (1) | 91 | 1,306 | 1,397 | - | (603) | (769) | 25 | (47) | 1,350 |
Trading reverse repos | 4,582 | (122) | 4,460 | (217) | - | (4,243) | - | 29 | 4,489 |
Trading repos | 4,394 | (122) | 4,272 | (217) | - | (4,055) | - | - | 4,272 |
Net position | 188 | - | 188 | - | - | (188) | - | 29 | 217 |
(1)
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
74
Page | |
Financial instruments | |
Critical accounting policy: Fair value | 74 |
Valuation | |
Fair value hierarchy (D) | 74 |
Valuation techniques (D) | 75 |
Inputs to valuation models (D) | 75 |
Valuation control (D) | 75 |
Key areas of judgment (D) | 76 |
Assets and liabilities split by fair value | |
hierarchy level (T) | 77 |
Valuation adjustments | |
Fair value adjustments made (T) | 78 |
Funding valuation adjustments (FVA) (D) | 78 |
Credit valuation adjustments (CVA) (D) | 78 |
Bid-offer (D) | 78 |
Product and deal specific (D) | 78 |
Own credit (D) | 78 |
Level 3 additional information | |
Level 3 ranges of unobservable inputs (D) | 79 |
Level 3 instruments, valuation | |
techniques and inputs (T) | 79 |
Level 3 sensitivities (D) | 80 |
Alternative assumptions (D) | 80 |
Other considerations (D) | 80 |
High and low range of fair value of | |
level 3 assets and liabilities (T) | 80 |
Movement in level 3 assets and liabilities | |
over the reporting period (D) | 81 |
Movement in level 3 assets and liabilities (T) | 81 |
Fair value of financial instruments measured | |
at amortised cost | |
Fair value of financial instruments | |
measured at amortised cost on the balance sheet (T) | 82 |
(D) = Descriptive; (T) = Table |
instruments
Financial instruments classified as mandatory fair value through
profit or loss; held-for-trading; designated fair value through
profit or loss and fair value through other comprehensive income
are recognised in the financial statements at fair value. All
derivatives are measured at fair value.
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. A fair value
measurement considers the characteristics of the asset or
liability and the assumptions that a market participant would
consider when pricing the asset or liability.
NWM N.V. Group manages some portfolios of financial assets
and financial liabilities based on its net exposure to either market
or credit risk. In these cases, the fair value is derived from the
net risk exposure of that portfolio with portfolio level adjustments
applied to incorporate bid-offer spreads, counterparty credit risk,
and funding costs (see Valuation Adjustments).
Where the market for a financial instrument is not active, fair
value is established using a valuation technique. These valuation
techniques involve a degree of estimation, the extent of which
depends on the instrument’s complexity and the availability of
market-based data. The complexity and uncertainty in the
financial instrument’s fair value is categorised using the fair
For accounting policy information refer to Accounting policies
Valuation
Fair value hierarchy
Financial instruments carried at fair value have been classified
under the fair value hierarchy. The classification ranges from
level 1 to level 3, with more expert judgment and price
uncertainty for those classified at level 3.
The determination of an instrument’s level cannot be made at a
global product level as a single product type can be in more
than one level. For example, a single name corporate credit
default swap could be in level 2 or level 3 depending on the level
of market activity for the referenced entity.
Level 1
– instruments valued using unadjusted quoted prices in
active and liquid markets, for identical financial instruments.
Examples include government bonds, listed equity shares and
certain exchange-traded derivatives.
Level 2
- instruments valued using valuation techniques that
have observable inputs. Observable inputs are those that are
readily available with limited adjustments required. Examples
include most government agency securities, investment-grade
corporate bonds, certain mortgage products – including
collateralised loan obligations (CLOs), most bank loans, repos
and reverse repos, state and municipal obligations, most notes
issued, certain money market securities, loan commitments and
most over the counter (OTC) derivatives.
Level 3
- instruments valued using a valuation technique where
at least one input which could have a significant effect on the
instrument’s valuation, is not based on observable market data.
Examples include non-derivative instruments which trade
infrequently, certain syndicated and commercial mortgage
loans, private equity, and derivatives with unobservable model
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
75
8 Financial instruments – valuation
continued
NWM N.V. Group derives the fair value of its instruments
differently depending on whether the instrument is a non-
modelled or a modelled product.
Non-modelled products
are valued directly from a price input,
typically on a position-by-position basis. Examples include
equities and most debt securities.
Non-modelled products can fall into any fair value levelling
hierarchy depending on the observable market activity, liquidity,
and assessment of valuation uncertainty of the instruments. The
assessment of fair value and the classification of the instrument
to a fair value level is subject to the valuation controls discussed
in the Valuation control section.
Modelled products
valued
using a pricing model range in
complexity from comparatively vanilla products such as interest
rate swaps and options (e.g., interest rate caps and floors)
through to more complex derivatives (e.g., balance guaranteed
swaps).
For modelled products the fair value is derived using the model
and the appropriate model inputs or parameters, as opposed to
a cash price equivalent. Model inputs are taken either directly or
indirectly from available data, where some inputs are also
modelled.
Fair value classification of modelled instruments is either level 2
or level 3, depending on the product/model combination, the
observability and quality of input parameters and other factors.
All these must be assessed to classify a position. The modelled
product is assigned to the lowest fair value hierarchy level of any
significant input used in that valuation.
Most derivative instruments, for example vanilla interest rate
swaps, foreign exchange swaps and liquid single name credit
derivatives, are classified as level 2. This is because they are
vanilla products valued using standard market models and with
observable inputs. Level 2 products range from vanilla to more
complex products, where the more complex products remain
classified as level 2 due to the low materiality of any
unobservable inputs.
Inputs to valuation models
When using valuation techniques, the fair value can be
significantly affected by the choice of valuation model and
underlying assumptions. Factors considered include the cashflow
amounts and timing of those cash flows, and application of
appropriate discount rates, incorporating both funding and credit
risk. Values between and beyond available data points are
obtained by interpolation and extrapolation. The principal inputs
to these valuation techniques are as follows:
Bond prices
- quoted prices are generally available for
government bonds, certain corporate securities, and some
mortgage-related products.
Credit spreads/margins
- these reflect credit default swap levels
or the return required over a benchmark rate or index to
compensate for the referenced credit risk. Where available,
these are derived from the price of credit default swaps or other
credit-based instruments, such as debt securities. When direct
prices are not available, credit spreads/margins are determined
with reference to available prices of entities with similar
characteristics.
Interest rates
- these are principally based on interest rate swap
prices referencing Interbank Offered Rates (IBOR) and overnight
interest rates, including SONIA (Sterling Overnight Interbank
Average Rate). Other quoted interest rates may also be used
from both the bond, and futures markets.
Foreign currency exchange rates
- there are observable prices
both for spot and forward contracts and futures in the world's
major currencies.
Equity and equity index prices
- quoted prices are generally
readily available for equity shares listed on the world's major
stock exchanges and for major indices on such shares.
Price volatilities and correlations -
volatility is a measure of the
tendency of a price to change with time. Correlation measures
the degree which two or more prices or variables are observed
to move together. Variables that move in the same direction
show positive correlation; those that move in opposite directions
are negatively correlated.
Prepayment rates
- rates used to reflect how fast a pool of
assets prepay. The fair value of a financial instrument that can
be prepaid by the issuer or borrower differs from that of an
instrument that cannot be prepaid. When valuing prepayable
instruments, the value of this prepayment option is considered.
Recovery rates/loss given default
- these are used as an input to
valuation models and reserves for asset-backed securities and
other credit products as an indicator of severity of losses on
default. Recovery rates are primarily sourced from market data
providers or the value of the underlying collateral.
Valuation control
NWM N.V. Group's control environment for the determination of
the fair value of financial instruments includes formalised
procedures for the review and validation of fair values. The
review of market prices and inputs is performed by an
independent price verification (IPV) team.
IPV is a key element of the control environment. Valuations are
first performed by the business which entered into the
transaction. These valuations are then reviewed by the IPV
team, independent of those trading the financial instruments, in
light of available pricing evidence.
Independent pricing data is collated from a range of sources.
Each source is reviewed for quality and the independent data
applied in the IPV processes using a formalised input quality
hierarchy. Consensus services are one source of independent
data and encompass interest rate, currency, credit, and bond
markets, providing comprehensive coverage of vanilla products
and a wide selection of exotic products.
Where measurement differences are identified through the IPV
process these are grouped by the quality hierarchy of the
independent data. If the size of the difference exceeds defined
thresholds, an adjustment is made to bring the valuation to
within the independently calculated fair value range.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
76
8 Financial instruments – valuation
continued
IPV takes place at least monthly, for all fair value financial
instruments. The IPV control includes formalised reporting and
escalation of any valuation differences in breach of established
thresholds.
The quality and completeness of the information gathered in the
IPV process gives an indication as to the liquidity and valuation
uncertainty of an instrument and forms part of the information
considered when determining fair value hierarchy classifications.
Initial fair value level classification of a financial instrument is
carried out by the IPV team. These initial classifications are
subject to senior management review. Particular attention is
paid to instruments transferring from one level to another, new
instrument classes or products, instruments where the
transaction price is significantly different from the fair value and
instruments where valuation uncertainty is high.
Valuation Committees are made up of valuation specialists and
senior business representatives from various functions and
oversees pricing, reserving and valuations issues. These
committees meet monthly to review and ratify any methodology
changes. The Executive Valuation Committee, a NatWest Group
Committee, meets quarterly to address key material and
subjective valuation issues, to review items escalated by
Valuation Committees and to discuss other relevant industry
matters.
The Group model risk policy sets the policy for model
documentation, testing and review. Governance of the model
risk policy is carried out by the Group Model Risk Oversight
Committee, which comprises model risk owners and
independent model experts. All models are required to be
independently validated in accordance with the model risk policy.
Over the years the business has simplified, with most products
classified as level 1 or 2 of the fair value hierarchy. However, the
diverse range of products historically traded by NWM N.V.
Group means some products remain classified as level 3. Level 3
indicates a significant level of pricing uncertainty, where expert
judgment is used. As such, extra disclosures are required in
respect of level 3 instruments.
In general, the degree of expert judgment used and hence
valuation uncertainty depends on the degree of liquidity of an
instrument or input.
Where markets are liquid, little judgment is required. However,
when the information regarding the liquidity in a particular
market is not clear, a judgment may need to be made. For
example, for an equity traded on an exchange, daily volumes of
trading can be seen, but for an OTC derivative, assessing the
liquidity of the market with no central exchange is more
challenging.
The breadth and depth of the IPV data allows for a rules-based
quality assessment to be made of market activity, liquidity, and
pricing uncertainty, which assists with the process of allocation
to an appropriate level. Where suitable independent pricing
information is not readily available, the quality assessment will
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
77
8 Financial instruments – valuation continued
The table below shows the assets and liabilities held by NWM N.V. Group split by fair value hierarchy level. Level 1 are considered the
most liquid instruments, and level 3 most illiquid, valued using expert judgment and so carry the most significant price uncertainty.
| 2025 | 2024 | |||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
€m | €m | €m | €m | €m | €m | €m | €m | |
Assets | ||||||||
Trading assets | ||||||||
Loans | - | 6,509 | - | 6,509 | - | 6,580 | 108 | 6,688 |
Derivatives | ||||||||
Interest rate | - | 3,922 | 36 | 3,958 | - | 3,925 | 49 | 3,974 |
Foreign exchange | - | 4,828 | 3 | 4,831 | - | 7,874 | 12 | 7,886 |
Other | - | 2 | - | 2 | - | - | - | - |
Amounts due from holding companies and | ||||||||
| fellow subsidiaries | - | 821 | - | 821 | - | 1,111 | - | 1,111 |
Other financial assets | ||||||||
Securities | 399 | 296 | - | 695 | 488 | 108 | - | 596 |
Total financial assets held at fair value | 399 | 16,378 | 39 | 16,816 | 488 | 19,598 | 169 | 20,255 |
As % of total fair value assets | 2% | 98% | 0% | 2% | 97% | 1% | ||
Liabilities | ||||||||
Amounts due to holding companies and fellow | ||||||||
| subsidiaries | - | 1,171 | - | 1,171 | - | 1,218 | - | 1,218 |
Trading liabilities | ||||||||
Deposits | - | 6,751 | - | 6,751 | - | 7,061 | - | 7,061 |
Derivatives | ||||||||
Interest rate | - | 2,526 | 54 | 2,580 | - | 2,556 | 82 | 2,638 |
Foreign exchange | - | 4,741 | 3 | 4,744 | - | 7,853 | 12 | 7,865 |
Other | - | 7 | - | 7 | - | 7 | - | 7 |
Other financial liabilities | ||||||||
Debt securities in issue | - | 466 | - | 466 | - | 369 | - | 369 |
Deposits | - | 640 | 31 | 671 | - | 471 | - | 471 |
Subordinated liabilities | - | 271 | - | 271 | - | 281 | - | 281 |
Total financial liabilities held at fair value | - | 16,573 | 88 | 16,661 | - | 19,816 | 94 | 19,910 |
As % of total fair value liabilities | - | 99% | 1% | - | 100% | 0% | ||
(1)
Transfers between levels are deemed to have occurred at the beginning of the quarter in which the instrument was transferred.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
78
8 Financial instruments – valuation
continued
Valuation adjustments
When valuing financial instruments in the trading book,
adjustments are made to mid-market valuations to cover bid-
offer spread, funding and credit risk. These adjustments are
presented in the table below:
2025 | 2024 | |
Adjustment | €m | €m |
Funding valuation adjustments | (8) | (10) |
Credit valuation adjustments | 117 | 123 |
Bid-offer | 1 | 1 |
Product and deal specific | 19 | 33 |
Total | 129 | 147 |
The negative FVA reserves related to uncollateralised exposures
with funding benefits to NWM N.V. Group. The decrease in CVA
was driven by credit spreads tightening and exposure changes
arising from the impacts of market moves and new trading
activity. The decrease in product and deal specific was driven by
the amortisation of deferred trade inception profits partially
offset by new trading activity.
Funding valuation adjustments (FVA)
FVA represents an estimate of the adjustment that a market
participant would make to incorporate funding costs and
benefits that arise in relation to derivative exposures. FVA is
calculated as a portfolio level adjustment and can result in either
a funding charge (positive) or funding benefit (negative).
Funding levels are applied to estimated potential future
exposures. For uncollateralised derivatives, the exposure reflects
the future valuation of the derivative. For collateralised
derivatives, the exposure reflects the difference between the
future valuation of the derivative and the level of collateral
posted.
Credit valuation adjustments (CVA)
CVA represents an estimate of the adjustment to fair value that
is made to incorporate the counterparty credit risk inherent in
derivative exposures. CVA is calculated on a portfolio basis
reflecting an estimate of the amount a third party would charge
to assume the credit risk.
Collateral held under a credit support agreement is factored into
the CVA calculation. In such cases where NWM N.V. Group
holds collateral against counterparty exposures, CVA is held to
the extent that residual risk remains.
FVA and CVA are actively managed by a credit and market risk
hedging process, and therefore movements in CVA and FVA are
partially offset by trading revenue on the hedges.
Bid-offer
Fair value positions are required to be marked to exit levels,
represented by bid (long positions) or offer (short positions)
levels. Non-derivative positions are typically marked to mid, with
a bid-offer adjustment applied to the net position. However
derivative exposures are adjusted to exit levels by taking bid-
offer reserves calculated on a portfolio basis. The reserving
approach is based on current market bid-offer spreads and
standard market bucketing of risk.
Bid-offer spreads vary by maturity and risk type to reflect
different spreads in the market. For positions where there is no
observable quote, the bid-offer spreads are widened in
comparison to proxies to reflect reduced liquidity or
observability.
Netting is applied on a portfolio basis to reflect the value at
which NWM N.V. Group believes it could exit the net risk of the
portfolio, rather than the sum of exit costs for each of the
portfolio’s individual trades. This is applied where the asset and
liability positions are managed as a portfolio for risk and
reporting purposes.
Product and deal specific
On initial recognition of financial assets and liabilities valued
using valuation techniques which have a significant dependence
on information other than observable market data, any
difference between the transaction price and that derived from
the valuation technique is deferred. Such amounts are
recognised in the income statement over the life of the
transaction; when market data becomes observable; or when
the transaction matures or is closed out as appropriate.
Where system generated valuations do not accurately reflect
market prices, manual valuation adjustments are applied either
at a position or portfolio level. Manual adjustments are subject to
the scrutiny of independent control teams and are subject to
monthly review by senior management.
Own credit
NWM N.V. Group considers the effect of its own credit standing
when valuing financial liabilities recorded at fair value. Own
credit spread adjustments are made when valuing issued debt
held at fair value, including issued structured notes. An own
credit adjustment is applied to positions where it is believed that
counterparties would consider NWM N.V. Group’s
creditworthiness when pricing trades.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
79
8 Financial instruments – valuation continued
Level 3 additional information
For illiquid assets and liabilities classified as level 3, additional information is provided on the valuation techniques used and price
sensitivity of the products to those inputs. This is to enable the reader to gauge the level of uncertainty that arises from positions with
significant unobservable inputs or modelling parameters.
Level 3 ranges of unobservable inputs
The table below provides additional information on level 3 instruments and inputs. This shows the valuation technique used for the fair
value calculation, the unobservable input and input range.
2025 | 2024 | ||||||
Financial instruments | Valuation techniques | Unobservable inputs | Units | Low | High | Low | High |
Trading assets and other financial assets | |||||||
Loans to customers | Price-based | Price | % | - | - | 100 | 100 |
Equity shares | Price-based | Price | EUR | 1 | 1,020 | 1 | 1,019 |
Derivative assets and liabilities | |||||||
Interest rate & FX derivatives | Option pricing | Correlation | % | - | 60 | - | 60 |
Volatility | % | 44 | 82 | 41 | 99 | ||
Constant prepayment rate | % | 7 | 15 | 7 | 15 | ||
Mean reversion | % | - | 10 | - | 10 | ||
(1)
NWM N.V. Group does not have any material liabilities measured at fair value that are issued with an inseparable third-party credit enhancement.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
80
8 Financial instruments – valuation
continued
Level 3 sensitivities
The level 3 sensitivities presented below are calculated at a
trade or low-level portfolio basis rather than an overall portfolio
basis. As individual sensitivities are aggregated with no reflection
of the correlated nature between instruments, the overall
portfolio sensitivity may not be accurately reflected. For
example, some portfolios may be negatively correlated to
others, where a downwards movement in one asset would
produce an upwards movement in another. However, due to the
additive presentation of the above figures this correlation impact
cannot be displayed. As such, the actual potential downside
sensitivity of the total portfolio may be less than the non-
correlated sum of the additive figures as shown in the below
table.
Alternative assumptions
Reasonably plausible alternative assumptions of unobservable
inputs are determined based on a specified target level of
certainty of 90%.
Alternative assumptions are determined with reference to all
available evidence including consideration of the following:
quality of independent pricing information considering
consistency between different sources, variation over time,
perceived tradability or otherwise of available quotes; consensus
service dispersion ranges; volume of trading activity and market
bias (e.g. one-way inventory); day 1 profit or loss arising on new
trades; number and nature of market participants; market
conditions; modelling consistency in the market; size and nature
of risk; length of holding of position; and market intelligence.
Other considerations
Whilst certain inputs used to calculate CVA, FVA and own credit
adjustments are not based on observable market data, the
uncertainty of these inputs is not considered to have a significant
effect on the net valuation of the related derivative portfolios
and issued debt.
As such, the fair value levelling of the derivative portfolios and
issued debt is not determined by CVA, FVA or own credit inputs.
In addition, any fair value sensitivity driven by these inputs is not
included in the level 3 sensitivities presented.
The table below shows the favourable and unfavourable range of fair value of the level 3 assets and liabilities. This range incorporates
the range of fair value inputs as described in the previous table.
| 2025 | 2024 | |||||
Level 3 | Favourable | Unfavourable | Level 3 | Favourable | Unfavourable | |
€m | €m | €m | €m | €m | €m | |
Assets | ||||||
Trading assets | ||||||
Loans | - | - | - | 108 | - | - |
Derivatives | ||||||
Interest rate | 36 | - | - | 49 | - | - |
Foreign exchange | 3 | - | - | 12 | - | - |
Total | 39 | - | - | 169 | - | - |
Liabilities | ||||||
Derivatives | ||||||
Interest rate | 54 | - | - | 82 | 10 | (10) |
Foreign exchange | 3 | - | - | 12 | - | - |
Other financial liabilities | ||||||
Deposits | 31 | - | - | - | - | - |
Total | 88 | - | - | 94 | 10 | (10) |
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
81
8 Financial instruments – valuation continued
Movement in level 3 assets and liabilities
The following table shows the movement in level 3 assets and liabilities in the year.
Other | Other | Other | Other | |||||
Derivatives | trading | financial | Total | Derivatives | trading | financial | Total | |
assets | assets (2) | assets (3) | assets | liabilities | liabilities (2) | liabilities | liabilities | |
2025 | €m | €m | €m | €m | €m | €m | €m | €m |
At 1 January | 61 | 108 | - | 169 | 94 | - | - | 94 |
Amounts recorded in the income | ||||||||
statement (1) | (6) | - | - | (6) | (17) | - | 3 | (14) |
Level 3 transfers in | 2 | - | - | 2 | 2 | - | 28 | 30 |
Level 3 transfers out | (1) | - | - | (1) | (2) | - | - | (2) |
Issuances | - | - | - | - | - | - | - | - |
Purchases/originations | 11 | - | - | 11 | 15 | - | - | 15 |
Settlements/other decreases | (13) | - | - | (13) | (8) | - | - | (8) |
Sales | (14) | (108) | - | (122) | (27) | - | - | (27) |
Foreign exchange and other adjustments | (1) | - | - | (1) | - | - | - | - |
At 31 December | 39 | - | - | 39 | 57 | - | 31 | 88 |
Amounts recorded in the income statement | ||||||||
in respect of balances held at period end | ||||||||
- unrealised | (12) | - | - | (12) | (11) | - | - | (11) |
2024 | ||||||||
At 1 January | 39 | 4 | 2 | 45 | 125 | - | - | 125 |
Amounts recorded in the income | ||||||||
statement (1) | 14 | 2 | - | 16 | (47) | - | - | (47) |
Amount recorded in the statement of | ||||||||
comprehensive income | - | - | - | - | - | - | - | - |
Level 3 transfers in | - | - | - | - | - | - | - | - |
Level 3 transfers out | (1) | - | - | (1) | (2) | - | - | (2) |
Purchases/originations | 17 | 107 | - | 124 | 27 | - | - | 27 |
Settlements/other decreases | - | (6) | - | (6) | - | - | - | - |
Sales | (8) | - | (1) | (9) | (9) | - | - | (9) |
Foreign exchange and other adjustments | - | 1 | (1) | - | - | - | - | - |
At 31 December | 61 | 108 | - | 169 | 94 | - | - | 94 |
Amounts recorded in the income statement | ||||||||
in respect of balances held at period end | ||||||||
- unrealised | 84 | - | - | 84 | 28 | - | - | 28 |
(1)
There were €11 million net gains on trading assets and liabilities (2024 - €63 million net gains) recorded in income from trading activities. Net loss on other instruments of €3 million (2024
- nil) were recorded in other operating income and interest income as appropriate.
(2)
Other trading assets and other trading liabilities comprise assets and liabilities held at fair value in trading portfolios.
(3)
Other financial assets comprise fair value through other comprehensive income, designated as at fair value through profit or loss and other fair value through profit or loss.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
82
8 Financial instruments – valuation continued
Fair value of financial instruments measured at amortised cost on the balance sheet
The following table shows the carrying value and fair value of financial instruments measured at amortised cost on the balance sheet.
Items where fair | |||||
Carrying | Fair | Fair value hierarchy level | value approximates | ||
value | value | Level 2 | Level 3 | carrying value | |
2025 | €m | €m | €m | €m | €m |
Financial assets | |||||
Cash and balances at central banks | 7,608 | 7,608 | - | - | 7,608 |
Settlement balances | 111 | 111 | - | - | 111 |
Loans to banks | 613 | 613 | 377 | 41 | 195 |
Loans to customers | 1,422 | 1,422 | - | 1,422 | - |
Amounts due from holding companies and fellow subsidiaries | 450 | 450 | - | 284 | 166 |
Other financial assets - securities | 1,264 | 1,261 | 99 | 1,162 | - |
2024 | |||||
Financial assets | |||||
Cash and balances at central banks | 6,187 | 6,187 | - | - | 6,187 |
Settlement balances | 866 | 866 | - | - | 866 |
Loans to banks | 225 | 225 | - | - | 225 |
Loans to customers | 935 | 917 | - | 917 | - |
Amounts due from holding companies and fellow subsidiaries | 76 | 76 | - | 64 | 12 |
Other financial assets - securities | 1,515 | 1,514 | 98 | 1,416 | - |
2025 | |||||
Financial liabilities | |||||
Bank deposits | 975 | 968 | - | 950 | 18 |
Customer deposits | 4,968 | 4,968 | - | 4,968 | - |
Amounts due to holding companies and fellow subsidiaries | 913 | 915 | 152 | 676 | 87 |
Settlement balances | 182 | 182 | - | - | 182 |
Other financial liabilities | - | ||||
Debt securities in issue | 2,542 | 2,543 | 1,003 | 1,540 | - |
Subordinated liabilities | 19 | 19 | 19 | - | - |
2024 | |||||
Financial liabilities | |||||
Bank deposits | 597 | 597 | - | 592 | 5 |
Customer deposits | 2,999 | 2,999 | - | 2,980 | 19 |
Amounts due to holding companies and fellow subsidiaries | 1,310 | 1,312 | 151 | 987 | 174 |
Settlement balances | 685 | 685 | - | - | 685 |
Other financial liabilities | |||||
Debt securities in issue | 2,528 | 2,528 | 1,592 | 936 | - |
Subordinated liabilities | 22 | 22 | 22 | - | - |
The assumptions and methodologies underlying the calculation of fair values of financial instruments at the balance sheet date are as
follows:
Short-term financial instruments
For certain short-term financial instruments, including but not
limited to; cash and balances at central banks, settlement
balances, loans with short-term maturities and customer
demand deposits, carrying value is deemed a reasonable
approximation of fair value.
Loans to banks and customers
In estimating the fair value of net loans to customers and banks
measured at amortised cost, NWM N.V. Group’s loans are
segregated into appropriate portfolios reflecting the
characteristics of the constituent loans. Loans are valued using
contractual cash flows that are discounted using a market
discount rate that incorporates the current spread for the
borrower or where this is not observable, the spread for
borrowers of a similar credit standing.
Debt securities and subordinated liabilities
Most debt securities are valued using quoted prices in active
markets or from quoted prices of similar financial instruments.
The remaining population is valued using discounted cash flows
at current offer rates.
Bank and customer deposits
Fair values of deposits are estimated using contractual cash
flows using a market discount rate incorporating the current
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
83
Remaining maturity
The following table shows the residual maturity of financial instruments, based on contractual date of maturity.
| 2025 | 2024 | |||||
Less than | More than | Less than | More than | |||
12 months | 12 months | Total | 12 months | 12 months | Total | |
€m | €m | €m | €m | €m | €m | |
Assets | ||||||
Cash and balances at central banks | 7,608 | 7,608 | 6,187 | - | 6,187 | |
Trading assets | 4,104 | 2,405 | 6,509 | 6,580 | 108 | 6,688 |
Derivatives | 3,462 | 5,329 | 8,791 | 6,074 | 5,786 | 11,860 |
Settlement balances | 111 | 111 | 866 | - | 866 | |
Loans to banks - amortised cost | 415 | 198 | 613 | 225 | - | 225 |
Loans to customers - amortised cost | 288 | 1,134 | 1,422 | 497 | 438 | 935 |
Amounts due from holding companies and fellow | ||||||
| subsidiaries (1) | 971 | 301 | 1,272 | 1,164 | 23 | 1,187 |
Other financial assets | 624 | 1,335 | 1,959 | 604 | 1,507 | 2,111 |
Liabilities | ||||||
Bank deposits | 501 | 474 | 975 | 547 | 50 | 597 |
Customer deposits | 4,949 | 19 | 4,968 | 2,985 | 14 | 2,999 |
Amounts due to holding companies and fellow subsidiaries (2) | 1,596 | 487 | 2,083 | 1,978 | 549 | 2,527 |
Settlement balances | 182 | 182 | 685 | - | 685 | |
Trading liabilities | 5,211 | 1,540 | 6,751 | 6,898 | 163 | 7,061 |
Derivatives | 3,493 | 3,838 | 7,331 | 6,088 | 4,422 | 10,510 |
Other financial liabilities | 2,042 | 1,637 | 3,679 | 1,943 | 1,425 | 3,368 |
Subordinated liabilities | - | 290 | 290 | - | 303 | 303 |
Lease liabilities | 2 | 4 | 6 | 2 | 6 | 8 |
(1)
Amounts due from holding companies and fellow subsidiaries relating to non-financial instruments of €21 million (2024 - €16 million) have been excluded from the table.
(2)
Amounts due to holding companies and fellow subsidiaries relating to non-financial instruments of €28 million (2024 – €31 million) have been excluded from the table.
Assets and liabilities by contractual cash flows up to
20 years
The tables below show the contractual undiscounted cash flows
receivable and payable, up to a period of 20 years, including
future receipts and payments of interest of financial assets and
liabilities by contractual maturity. The balances in the following
tables do not agree directly with the consolidated balance sheet,
as the tables include all cash flows relating to principal and
future coupon payments, presented on an undiscounted basis.
The tables have been prepared on the following basis:
Financial assets have been reflected in the time band of the
latest date on which they could be repaid, unless earlier
repayment can be demanded by NWM N.V. Group. Financial
liabilities are included at the earliest date on which the
counterparty can require repayment, regardless of whether or
not such early repayment results in a penalty. If repayment is
triggered by, or is subject to, specific criteria such as market
price hurdles being reached, the asset is included in the time
band that contains the latest date on which it can be repaid,
regardless of early repayment. The liability is included in the time
band that contains the earliest possible date on which the
conditions could be fulfilled, without considering the probability of
the conditions being met.
For example, if a structured note is
automatically prepaid when an equity index exceeds a certain
level, the cash outflow will be included in the less than three
months’ period whatever the level of the index at the year end.
The settlement date of debt securities in issue, issued by certain
securitisation vehicles consolidated by NWM N.V. Group depends
on when cash flows are received from the securitised assets.
Where these assets are prepayable, the timing of the cash
outflow relating to securities assumes that each asset will be
prepaid at the earliest possible date. As the repayments of
assets and liabilities are linked, the repayment of assets in
securitisations is shown on the earliest date that the asset can
be prepaid, as this is the basis used for liabilities.
The principal amounts of financial liabilities that are repayable
after 20 years or where the counterparty has no right to
repayment of the principal, are excluded from the table along
with interest payments after 20 years.
MFVTPL assets of €16.1 billion (2024 - €19.7 billion) and HFT
liabilities of €15.3 billion (2024 - €18.8 billion) have been excluded
from the following tables.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
84
9 Financial instruments - maturity analysis continued
3 - 12 | ||||||
0 - 3 months | months | 1 - 3 years | 3 - 5 years | 5 - 10 years | 10 - 20 years | |
2025 | €m | €m | €m | €m | €m | €m |
Assets by contractual maturity up to 20 years | ||||||
Cash and balances at central banks | 7,608 | - | - | - | - | - |
Settlement balances | 111 | - | - | - | - | - |
Loans to banks - amortised cost | 238 | 178 | 198 | - | - | - |
Loans to customers - amortised cost | 39 | 319 | 477 | 679 | 150 | - |
Amounts due from holding companies and fellow subsidiaries (1) | 432 | - | - | - | - | - |
Other financial assets (2) | 410 | 212 | 56 | 151 | 146 | 100 |
8,838 | 709 | 731 | 830 | 296 | 100 | |
Liabilities by contractual maturity up to 20 years | ||||||
Bank deposits | 237 | 268 | - | 474 | - | 1 |
Customer deposits | 4,530 | 425 | 11 | - | - | 17 |
Amounts due to holding companies and fellow subsidiaries (3) | 91 | 341 | 184 | 322 | - | - |
Settlement balances | 182 | - | - | - | - | - |
Subordinated liabilities | - | - | - | - | - | 271 |
Other financial liabilities | 256 | 1,786 | 814 | 305 | 356 | 301 |
Lease liabilities | 1 | 1 | 3 | 1 | - | - |
5,297 | 2,821 | 1,012 | 1,102 | 356 | 590 | |
Guarantees and commitments - notional amount (4) | ||||||
Guarantees (5) | 527 | - | - | - | - | - |
Commitments (6) | 7,374 | - | - | - | - | - |
7,901 | - | - | - | - | - | |
2024 | ||||||
Assets by contractual maturity up to 20 years | ||||||
Cash and balances at central banks | 6,187 | - | - | - | - | - |
Settlement balances | 866 | - | - | - | - | - |
Loans to banks - amortised cost | 220 | 5 | - | - | - | - |
Loans to customers - amortised cost | 61 | 476 | 215 | 215 | 72 | - |
Amounts due from holding companies and fellow subsidiaries (1) | 55 | - | - | - | - | - |
Other financial assets (2) | 400 | 133 | 71 | 59 | 290 | 452 |
7,789 | 614 | 286 | 274 | 362 | 452 | |
Liabilities by contractual maturity up to 20 years | ||||||
Bank deposits | 245 | 307 | 50 | - | - | - |
Customer deposits | 2,263 | 735 | 5 | - | - | 17 |
Amounts due to holding companies and fellow subsidiaries (3) | 422 | 346 | 506 | 45 | - | - |
Settlement balances | 685 | - | - | - | - | - |
Subordinated liabilities | - | - | - | - | - | 281 |
Other financial liabilities | 881 | 1,076 | 814 | 301 | 111 | 241 |
Lease liabilities | 1 | 2 | 4 | 2 | - | - |
4,497 | 2,466 | 1,379 | 348 | 111 | 539 | |
Guarantees and commitments - notional amount (4) | ||||||
Guarantees (5) | 511 | - | - | - | - | - |
Commitments (6) | 6,892 | - | - | - | - | - |
7,403 | - | - | - | - | - |
(1)
Amounts due from holding companies and fellow subsidiaries relating to non-financial instruments have been excluded from the tables.
(2)
Other financial assets exclude equity shares.
(3)
Amounts due to holding companies and fellow subsidiaries relating to non-financial instruments have been excluded from the tables.
(4)
Refer to Note 22 Memorandum items – Contingent liabilities and commitments.
(5)
NWM N.V. Group is only called upon to satisfy a guarantee when the guaranteed party fails to meet its obligations. NWM N.V. Group expects most guarantees it provides to expire
unused.
(6)
NWM N.V. Group has given commitments to provide funds to customers under undrawn formal facilities, credit lines and other commitments to lend subject to certain conditions being
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
85
Trading assets and liabilities comprise assets and liabilities held at fair value in trading portfolios.
2025 | 2024 | |
€m | €m | |
Assets | ||
Loans | ||
Reverse repos | 4,630 | 4,489 |
Collateral given | 1,867 | 2,079 |
Other loans | 12 | 120 |
Total | 6,509 | 6,688 |
Liabilities | ||
Deposits | ||
Repos | 4,424 | 4,272 |
Collateral received | 2,325 | 2,787 |
Other deposits | 2 | 2 |
Total | 6,751 | 7,061 |
NWM N.V. Group uses derivatives as part of its trading activities or to manage its own risk such as interest rate, foreign exchange, or
credit risk.
| Notional | Asset | Liability | |||||||
Traded on | Traded on | Traded on | |||||||
recognised | Traded over | recognised | Traded over | recognised | Traded over | ||||
exchanges | the counter | Total | exchanges | the counter | Total | exchanges | the counter | Total | |
2025 | €bn | €bn | €bn | €m | €m | €m | €m | €m | €m |
Interest rate | 37 | 1,414 | 1,451 | - | 3,958 | 3,958 | - | 2,580 | 2,580 |
- Swaps | - | 1,141 | 1,141 | - | 3,746 | 3,746 | - | 2,375 | 2,375 |
- Options | - | 90 | 90 | - | 212 | 212 | - | 205 | 205 |
- Forwards and futures | 37 | 183 | 220 | - | - | - | - | - | - |
Exchange rate | - | 428 | 428 | - | 4,831 | 4,831 | - | 4,744 | 4,744 |
- Swaps | - | 37 | 37 | - | 1,203 | 1,203 | - | 1,170 | 1,170 |
- Options | - | 10 | 10 | - | 41 | 41 | - | 57 | 57 |
- Spot, forwards and futures | - | 381 | 381 | - | 3,587 | 3,587 | - | 3,517 | 3,517 |
Credit | - | - | - | - | 2 | 2 | - | 7 | 7 |
Equity and commodity | - | - | - | - | - | - | - | - | - |
Total | 37 | 1,842 | 1,879 | - | 8,791 | 8,791 | - | 7,331 | 7,331 |
2024 | |||||||||
Interest rate | 15 | 1,215 | 1,230 | - | 3,974 | 3,974 | - | 2,638 | 2,638 |
- Swaps | - | 1,015 | 1,015 | - | 3,679 | 3,679 | - | 2,408 | 2,408 |
- Options | - | 102 | 102 | - | 295 | 295 | - | 230 | 230 |
- Forwards and futures | 15 | 98 | 113 | - | - | - | - | - | - |
Exchange rate | - | 432 | 432 | - | 7,886 | 7,886 | - | 7,865 | 7,865 |
- Swaps | - | 36 | 36 | - | 1,434 | 1,434 | - | 1,464 | 1,464 |
- Options | - | 10 | 10 | - | 73 | 73 | - | 74 | 74 |
- Spot, forwards and futures | - | 386 | 386 | - | 6,379 | 6,379 | - | 6,327 | 6,327 |
Credit | - | - | - | - | - | - | - | 7 | 7 |
Equity and commodity | - | - | - | - | - | - | - | - | - |
Total | 15 | 1,647 | 1,662 | - | 11,860 | 11,860 | - | 10,510 | 10,510 |
Included in the table above is the notional amount of €1,036 billion (2024 - €795 billion) of interest rate derivatives that are traded over
the counter and settled through central clearing counterparties. NWM N.V. Group has no other type of derivatives that are settled
through central counterparties.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
86
11 Derivatives continued
Hedge accounting using derivatives
For accounting policy information refer to Accounting policies 4.6
and 4.10.
Refer to Note 27 for amounts due from/to fellow NatWest Group
companies.
NWM N.V. Group applies hedge accounting to reduce the
accounting mismatch caused in the income statement by using
derivatives to hedge the following risks: interest rate, foreign
exchange and the foreign exchange risk associated with net
investment in foreign operations.
NWM N.V. Group’s interest rate hedging relates to the
management of NWM N.V. Group’s non-trading structural
interest rate risk, caused by the mismatch between fixed
interest rates and floating interest rates on its financial
instruments. NWM N.V. Group manages this risk within
approved limits. Residual risk positions are hedged with
derivatives, principally interest rate swaps.
Cash flow hedges of interest rate risk relate to exposures to the
variability in future interest payments and receipts due to the
movement of interest rates on forecast transactions and on
financial assets and financial liabilities. This variability in cash
flows is hedged by interest rate swaps, which convert variable
cash flows into fixed. For these cash flow hedge relationships,
the hedged items are actual and forecast variable interest rate
cash flows arising from financial assets and financial liabilities
with interest rates linked to the relevant interest rates, most
notably the European Central Bank deposit rate. The variability
in cash flows due to movements in the relevant interest rate is
hedged; this risk component is identified using the risk
management systems of NWM N.V. Group and encompasses
the majority of cash flow variability risk.
Suitable larger fixed rate financial instruments are subject to fair
value hedging in line with documented risk management
strategies.
Fair value hedges of interest rate risk involve interest rate swaps
transforming the fixed interest rate risk in financial assets and
financial liabilities to floating. The hedged risk is the risk of
changes in the hedged item’s fair value attributable to changes
in the interest rate risk component of the hedged item. The
significant interest rates identified as risk components are SOFR,
ESTR and EURIBOR. These risk components are identified using
the risk management systems of NWM N.V. Group and
encompass the majority of the hedged item’s fair value risk
NWM N.V. Group hedges the exchange rate risk of its net
investment in foreign currency denominated operations with
currency borrowings and forward foreign exchange contracts.
NWM N.V. Group reviews the value of the investments’ net
assets, executing hedges where appropriate to reduce the
sensitivity of capital ratios to foreign exchange rate movement.
Hedge accounting relationships will be designated where
required.
Exchange rate risk also arises in NWM N.V. Group where
payments are denominated in currencies other than the
functional currency. Residual risk positions are hedged with
forward foreign exchange contracts, fixing the exchange rate
the payments will be settled in. The derivatives are documented
as cash flow hedges.
For all cash flow hedging, fair value hedge relationships and net
investment hedging, NWM N.V. Group determines that there is
an economic relationship between the hedged item and hedging
instrument via assessing the initial and ongoing effectiveness by
comparing movements in the fair value of the expected highly
probable forecast interest cash flows/ fair value of the hedged
item attributable to the hedged risk with movements in the fair
value of the expected changes in cash flows from the hedging
instrument. The method used for comparing movements is
either regression testing, or the dollar offset method. The
method for testing effectiveness and the period over which the
test is performed depends on the applicable risk management
strategy and is applied consistently to each risk management
strategy. Hedge effectiveness is assessed on a cumulative basis
and the determination of effectiveness is in line with the
requirements of IAS 39.
NWM N.V. Group uses either the actual ratio between the
hedged item and hedging instrument(s) or one that minimises
hedge ineffectiveness to establish the hedge ratio for hedge
accounting. Hedge ineffectiveness is measured in line with the
requirements of IAS 39 and recognised in the income statement
as it arises.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
87
11 Derivatives continued
Derivatives in hedge accounting relationships
Included in the table below are derivatives held for hedging as follows.
2025 | 2024 | |||||||
Changes in fair | ||||||||
value used for | Changes in fair | |||||||
hedge | value used for hedge | |||||||
Notional | Assets | Liabilities | ineffectiveness (1) | Notional | Assets | Liabilities | ineffectiveness (1) | |
€bn | €m | €m | €m | €bn | €m | €m | €m | |
Fair value hedging | ||||||||
Interest rate contracts | 0.1 | 1 | 1 | 1 | 0.1 | 1 | 1 | 1 |
Cash flow hedging | ||||||||
Interest rate contracts | 1.5 | 16 | 6 | (22) | 1.4 | 26 | 1 | 6 |
1.6 | 17 | 7 | (21) | 1.5 | 27 | 2 | 7 | |
IFRS netting and clearing | ||||||||
house settlements | (17) | (7) | (27) | (2) | ||||
- | - | - | - | |||||
(1)
The change in fair value per hedge ineffectiveness includes instruments that were derecognised in the year.
Hedge ineffectiveness
Hedge ineffectiveness recognised in other operating income comprised.
2025 | 2024 | |
€m | €m | |
Fair value hedging | ||
Loss on hedged items attributable to the hedged risk | (1) | (1) |
Gain on hedging instruments | 1 | 1 |
Fair value hedging ineffectiveness | - | - |
The main sources of ineffectiveness for interest rate risk hedge accounting relationships are:
•
The effect of the counterparty credit risk on the fair value of the interest rate swap which is not reflected in the fair value of the
hedged item attributable to the change in interest rate (fair value hedge);
•
Differences in the repricing basis between the hedging instrument and hedged cash flows (cash flow hedge); and
•
Upfront present values on the hedging derivatives where hedge accounting relationships have been designated after the trade
date (cash flow hedge and fair value hedge).
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
88
11 Derivatives continued
Maturity of notional hedging contracts
The following table shows the period in which notional of the hedging contract ends.
0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | Over 10 years | Total | |
2025 | €bn | €bn | €bn | €bn | €bn | €bn | €bn |
Fair value hedging | |||||||
Interest rate risk | |||||||
Hedging assets | - | - | - | 0.1 | - | - | 0.1 |
Hedging liabilities | - | - | - | - | - | - | - |
2024 | |||||||
Fair value hedging | |||||||
Interest rate risk | |||||||
Hedging assets | - | - | - | 0.1 | - | - | 0.1 |
Hedging liabilities | - | - | - | - | - | - | - |
2025 | |||||||
Cash flow hedging | |||||||
Interest rate risk | |||||||
Hedging assets | - | 0.1 | 0.4 | 0.5 | 0.5 | - | 1.5 |
2024 | |||||||
Cash flow hedging | |||||||
Interest rate risk | |||||||
Hedging assets | 0.1 | 0.2 | 0.5 | 0.2 | 0.4 | - | 1.4 |
Average fixed interest rates
Average fixed rate for cash flow hedges, interest rate risk.
0-3 months | 3-12 months | 1-3 years | 3-5 years | 5-10 years | Over 10 years | Total | |
| 2025 | % | % | % | % | % | % | % |
Average fixed interest rate | |||||||
Hedging assets | 2.45 | 2.42 | 2.42 | 2.25 | 2.67 | - | 2.43 |
Hedging liabilities | - | - | - | - | - | - | - |
2024 | |||||||
Average fixed interest rate | |||||||
Hedging assets | 2.65 | 2.67 | 2.66 | 2.74 | 2.72 | - | 2.69 |
Hedging liabilities | - | - | - | - | - | - | - |
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
89
11 Derivatives continued
Analysis of hedged items and related hedging instruments
The table below analyses assets and liabilities including intercompany, subject to hedging derivatives.
Carrying value | Impact on | Changes in fair | |
of hedged | hedged items | value used as a | |
assets and | included in | basis to determine | |
liabilities | carrying value | ineffectiveness (1) | |
2025 | €m | €m | €m |
Fair value hedging - interest rate | |||
Other financial assets - securities | 117 | - | (1) |
Other financial liabilities - debt securities in issue | 15 | - | - |
2024 | |||
Fair value hedging - interest rate | |||
Other financial assets - securities | 102 | 1 | 1 |
Other financial liabilities - debt securities in issue | 20 | - | (2) |
2025 | |||
Cash flow hedging - interest rate | |||
Balances with central banks | 1,526 | 22 | |
2024 | |||
Cash flow hedging - interest rate | |||
Balances with central banks | 1,404 | (6) |
(1)
The change in fair value per hedge ineffectiveness includes instruments that were derecognised in the year.
Analysis of cash flow hedge reserve
The following table shows analysis of the cash flow hedge reserve.
Cash flow hedge reserve | ||
2025 | 2024 | |
€m | €m | |
Continuing | ||
Interest rate risk | 6 | 31 |
De-designated | ||
Interest rate risk | 2 | - |
Total | 8 | 31 |
Cash flow hedge reserve | ||
2025 | 2024 | |
€m | €m | |
Amount recognised in equity | ||
Interest rate risk | (15) | (12) |
Amount transferred from equity to earnings | ||
Interest rate risk to net interest income | (7) | 15 |
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
90
The table below summarises loans and related credit impairment measures within the scope of ECL framework.
2025 | 2024 | |
€m | €m | |
Loans - amortised cost | ||
Stage 1 | 1,901 | 996 |
Stage 2 | 121 | 118 |
Stage 3 | - | 34 |
Inter-Group (1) | 284 | 64 |
Total | 2,306 | 1,212 |
ECL provisions | ||
Stage 1 | 8 | 5 |
Stage 2 | 4 | 2 |
Stage 3 | - | 1 |
Total | 12 | 8 |
ECL provisions coverage (2) | ||
Stage 1 (%) | 0.42 | 0.50 |
Stage 2 (%) | 3.31 | 1.69 |
Stage 3 (%) | - | 3 |
Total | 0.59 | 0.70 |
Other financial assets - Gross exposure | 9,569 | 8,297 |
Other financial assets - ECL provision | 2 | 1 |
Impairment charge (releases) | ||
ECL charge/(release) - third party (3) | 5 | (1) |
Amounts written off | 1 | - |
(1)
The NWM N.V. Group intercompany assets were classified in Stage 1. The ECL for these loans was €0.1 million (2024 – nil).
(2)
ECL provisions coverage is calculated as ECL provisions divided by loans – amortised cost and FVOCI. It is calculated on loans and total ECL provisions, including ECL for other (non-
loan) assets and unutilised exposure. Some segments with a high proportion of debt securities or unutilised exposure may result in a not meaningful coverage ratio.
(3)
Includes €0.5 million charge (2024 – €1.3 million release) related to other financial assets and nil release (2024 – €0.1 million release) relating to contingent liabilities.
(4)
The table shows gross loans only and excludes amounts that are outside the scope of the ECL framework. Refer to page 31 for Financial instruments within the scope of the IFRS 9 ECL
framework for further details. Other financial assets within the scope of the IFRS 9 ECL framework were cash and balances at central banks totalling €7.6 billion (2024 – €6.2 billion) and
debt securities of €2.0 billion (2024 – €2.1 billion).
(5)
NWM N.V. Group held collateral against third party loans in Stage 3 of nil (2024 – €32.4) and against Stage 1 and Stage 2 third party loans of €462 million (2024 - €258 million). Inter-
group loans were uncollateralised.
For accounting policy information refer to Accounting Policy 4.11.
Credit risk enhancement and mitigation
For information on Credit risk enhancement and mitigation held as security, refer to Risk and capital management – Credit risk
enhancement and mitigation section.
IFRS 9 models
Refer to Credit risk – IFRS 9 models section for further details.
Approach for multiple economic scenarios (MES)
The base scenario plays a greater part in the calculation of ECL than the approach to MES. Refer to Credit risk – Economic loss
| Debt securities | |||||||
Central and | |||||||
local government | Other | Equity | |||||
US | Other | debt | Total | shares | Loans | Total | |
2025 | €m | €m | €m | €m | €m | €m | €m |
Mandatory fair value through profit or loss | - | - | - | - | - | - | - |
Fair value through other comprehensive income | - | 398 | 297 | 695 | - | - | 695 |
Amortised cost | - | - | 1,264 | 1,264 | - | - | 1,264 |
Total | - | 398 | 1,561 | 1,959 | - | - | 1,959 |
2024 | |||||||
Mandatory fair value through profit or loss | - | - | - | - | 1 | - | 1 |
Fair value through other comprehensive income | - | 590 | 5 | 595 | - | - | 595 |
Amortised cost | - | - | 1,515 | 1,515 | - | - | 1,515 |
Total | - | 590 | 1,520 | 2,110 | 1 | - | 2,111 |
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
91
2025 | 2024 | |
€m | €m | |
Property and equipment | 6 | 8 |
Deferred tax | 154 | 103 |
Other assets | 15 | 8 |
175 | 119 |
(1)
2025 | 2024 | |
€m | €m | |
Customer deposits - designated as at fair value through profit or loss | 670 | 471 |
Debt securities in issue - amortised cost | 2,542 | 2,528 |
Debt securities in issue - DFV | 467 | 369 |
3,679 | 3,368 |
First call | Maturity | Capital | 2025 | 2024 | ||
Dated loan capital | date | date | treatment | €m | €m | |
€170 million | Floating rate notes | - | Feb-2041 | Not applicable | 271 | 282 |
$150 million | 7.125% notes | - | Oct-2093 | Not applicable | 19 | 21 |
290 | 303 |
Following table analyses intercompany subordinated liabilities. These balances are included in amounts due to holding companies and
fellow subsidiaries, refer to Note 27.
First call | Maturity | Capital | 2025 | 2024 | ||
Dated loan capital | date | date | treatment | €m | €m | |
€150 million | Floating rate notes | Dec-2024 | Dec-2029 | Tier 2 | 150 | 150 |
150 | 150 |
2025 | 2024 | |
€m | €m | |
Lease liabilities | 6 | 8 |
Provisions for liabilities and charges | 11 | 5 |
Accruals | 23 | 24 |
Deferred income | 19 | 10 |
Current tax | 6 | 7 |
Deferred tax (Note 6) | 2 | 2 |
Other liabilities | 14 | 14 |
Total | 81 | 70 |
Included in other liabilities are provisions for liabilities and charges of €11 million (2024 - €5 million), of which litigation provisions are
€0.2 million (2024 - €0.5 million) and restructuring provisions of €10.5 million (2024 - €4 million). Arising out of its normal business
operations, the NWM N.V. Group is party to legal proceedings in the Netherlands, the United Kingdom, the United States of America
and other jurisdictions.
Litigation provisions at 31 December 2025 related to various proceedings; no individual provision is material. Detailed descriptions of
the NWM N.V. Group’s legal proceedings and discussion of the associated uncertainties are given in Note 22.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
92
Share capital
NWM N.V.’s share capital at 31 December 2025 consisted of 11,112 issued and fully paid ordinary shares of €4.50 each. Its authorised
share capital amounts to €225,000. It comprises 41,500 ordinary shares, each with a nominal value of €4.50 and 8,500 preference
shares, each with a nominal value of €4.50. All issued ordinary shares have been fully paid. There have been no changes in share
capital compared to 2024. Each ordinary share entitles the holder to cast one vote. Subject to certain exceptions provided or by law or
in the Articles of Association, resolutions are passed by an absolute majority of the votes cast. When shares are issued, each holder of
shares shall have pre-emptive rights, in proportion to the aggregate amount of their shares, except in the case of an issue of shares
for a consideration other than in cash. In the event of the dissolution and liquidation of NWM N.V., the assets remaining after payment
Ordinary shares carry certain pre-emption rights and rank equally in voting, dividend and liquidation rights.
Dutch law prescribes that only the freely distributable reserves of NWM N.V. are taken into account for the purpose of making
distributions and in determining the permissible applications of the share premium account. NWM N.V. Group optimises capital
efficiency by maintaining reserves in subsidiaries, including regulated entities. The remittance of reserves to NWM N.V. or the
NWM N.V. has not paid ordinary dividends in 2025. In 2024, NWM N.V. paid ordinary dividends in March 2024 and in October 2024 of
€3,779.70 per share and €2,699.78 per share respectively.
Paid-in equity
Additional Tier 1 instruments issued by NWM N.V. having the legal form of debt are classified as equity under IFRS. The coupons on
these instruments are non-cumulative and payable at NWM N.V.’s discretion. In September 2024 NWM N.V. issued capital securities of
€250 million which qualify as Additional Tier 1 capital as described in CRD IV and CRR. These securities are perpetual. They can be
A structured entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in deciding
who controls the entity, for example when any voting rights relate to administrative tasks only and the relevant activities are directed
by means of contractual arrangements. SEs are usually established for a specific, limited purpose. They do not carry out a business or
trade and typically have no employees.
Unconsolidated structured entities
The term ‘unconsolidated structured entities’ refers to structured entities not controlled by NWM N.V. Group, and which are
established either by NWM N.V. Group or a third party. An interest in a structured entity is any form of contractual or non-contractual
involvement which creates variability in returns for NWM N.V. Group arising from the performance of the entity. Such interests include
holdings of debt or equity securities, derivatives that transfer financial risks from the entity to NWM N.V. Group, provision of lending
and loan commitments, financial guarantees and investment management agreements. NWM N.V. Group enters into transactions with
unconsolidated structured entities in the normal course of business to facilitate customer transactions, to provide risk management
services and for specific investment opportunities. Structured entities may take the form of funds, trusts, partnerships, securitisation
vehicles, and private investment companies. NWM N.V. Group considers itself to be the sponsor of a structured entity where it is
primarily involved in the set up and design of the entity and where NWM N.V. Group transfers assets to the entity, markets products
associated with the entity in its own name, and/or provides guarantees in relation to the performance of the entity.
The nature and extent of NWM N.V. Group’s interests in unconsolidated structured entities is summarised below.
| 2025 | 2024 | |||||
Asset-backed | Investment | Asset-backed | Investment | |||
securitisation | funds | securitisation | funds | |||
vehicles | and other | Total | vehicles | and other | Total | |
€m | €m | €m | €m | €m | €m | |
Assets | ||||||
Trading assets | 30 | - | 30 | 61 | - | 61 |
Derivatives | 2 | - | 2 | 4 | - | 4 |
Loans to customers | 193 | 4 | 197 | 68 | 4 | 72 |
Other financial assets | 1,090 | 76 | 1,166 | 1,342 | 75 | 1,417 |
Total | 1,315 | 80 | 1,395 | 1,475 | 79 | 1,554 |
Liabilities | ||||||
Derivatives | 18 | - | 18 | 44 | - | 44 |
Total | 18 | - | 18 | 44 | - | 44 |
Off balance sheet | ||||||
Liquidity facilities/loan commitments | 239 | 41 | 280 | 256 | 26 | 282 |
Total | 239 | 41 | 280 | 256 | 26 | 282 |
Maximum exposure | 1,536 | 121 | 1,657 | 1,687 | 105 | 1,792 |
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
93
Transfers that do not qualify for derecognition
NWM N.V. Group enters into securities repurchase and securities lending agreements in accordance with normal market practice
which includes the provision of additional collateral if necessary. Under standard terms in the UK, US and EU markets, the recipient
has an unrestricted right to sell or repledge collateral, subject to returning equivalent securities on maturity of the transaction.
Securities sold under repurchase transactions and transactions with the substance of securities repurchase agreements are not
derecognised if NWM N.V. Group retains substantially all the risks and rewards of ownership. The fair value (and carrying value) of
securities transferred under such transactions included on the balance sheet, are set out below. All of these securities could be sold or
repledged by the holder. Securities received as collateral under reverse repurchase agreements were €4.6 billion (2024 - €4.5 billion) of
which €4.1 billion (2024 - €4.5 billion) had been sold or repledged as collateral of the NWM N.V. Group’s own transactions.
2025 | 2024 | |
The following assets have failed derecognition | €m | €m |
Other financial assets | 422 | 459 |
(1)
NWM N.V. Group pledges collateral with its counterparties primarily in respect of derivative liabilities and bank and stock borrowings.
Under standard arrangements the counterparty has the right to sell or repledge the collateral. Where the NWM N.V. Group retains
exposure to the significant risks and rewards of the transferred collateral it is not derecognised from the NWM N.V. Group balance
sheet and continues to be disclosed within either Trading Assets or Other Financial Assets.
There were €2.5 billion of assets pledged against liabilities in 2025 (2024 - €2.9 billion).
Collateral received
The fair value of securities accepted as collateral relating primarily to standard securities lending, reverse repurchase agreements,
swaps of securities and margining related to derivatives and other trading assets that NWM N.V. Group is permitted to sell or repledge
in the absence of default was €13,304 million (2024 - €13,590 million).
The fair value of any such collateral sold or repledged was €12,096 million (2024 - €11,590 million).
NWM N.V. Group is obliged to return equivalent securities. These transactions are conducted under terms that are usual and
NWM N.V. Group's regulatory capital resources were as follows:
2025 | 2024 | |
€m | €m | |
Tier 1 | ||
Controlling interests | 1,826 | 1,847 |
Adjustment for: | ||
- Other regulatory adjustments (1) | (369) | (227) |
Common equity Tier 1 | 1,457 | 1,620 |
Hybrid capital | 250 | 250 |
Additional Tier 1 | 250 | 250 |
Total Tier 1 | 1,707 | 1,870 |
Tier 2 | ||
Subordinated debt | 119 | 150 |
IRB Excess of provisions over expected losses eligible | 1 | 2 |
Total Tier 2 capital | 120 | 152 |
Total regulatory capital | 1,827 | 2,022 |
(1)
Includes the reversal of own credit risk of €8 million (2024 - €13 million), the deduction of current-year profit designated as a foreseen dividend, and other regulatory capital deductions
(refer to page 22 for further details).
It is NWM N.V. Group’s policy to maintain an appropriate capital
base, to expand it as appropriate and to utilise it efficiently
throughout its activities to optimise the return to shareholders,
while maintaining a prudent relationship between the capital
base and the underlying risks of the business. In carrying out this
policy, NWM N.V. Group has regard to the supervisory
requirements of the ECB. The ECB uses capital ratios as a
measure of capital adequacy in the Dutch banking sector,
comparing a bank’s capital resources with its risk-weighted
assets (RWAs) (the assets and off-balance sheet exposures are
weighted to reflect the inherent credit and other risks). NWM
N.V. Group has complied with its capital requirements during the
year.
A number of subsidiaries and sub-groups within NWM N.V.
Group are subject to various individual regulatory capital
requirements. Furthermore, the payment of dividends by
subsidiaries and the ability of members of NWM N.V. Group to
lend money to other members of NWM N.V. Group may be
subject to restrictions such as local regulatory or legal
requirements, the availability of reserves and financial and
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
94
Contingent liabilities and commitments
The amounts shown in the table below are intended only to provide an indication of the volume of business outstanding at 31
December 2025. Although NWM N.V. Group is exposed to credit risk in the event of non-performance of the obligations undertaken by
customers, the amounts shown do not, and are not intended to, provide any indication of NWM N.V. Group's expectation of future
losses.
2025 | 2024 | |
€m | €m | |
Contingent liabilities and commitments | ||
Guarantees | 527 | 511 |
Standby facilities, credit lines and other commitments | 7,619 | 6,959 |
Total | 8,146 | 7,470 |
Banking commitments and contingent obligations, which have
been entered into on behalf of customers and for which there are
corresponding obligations from customers, are not included in
assets and liabilities. NWM N.V. Group's maximum exposure to
credit loss, in the event of non-performance by the other party
and where all counterclaims, collateral or security proves
valueless, is represented by the contractual nominal amount of
these instruments included in the table above. These
commitments and contingent obligations are subject to NWM
Guarantees
- NWM N.V. Group gives guarantees on behalf of
customers. A financial guarantee represents an irrevocable
undertaking that NWM N.V. Group will meet a customer's
obligations to third parties if the customer fails to do so. The
maximum amount that NWM N.V. Group could be required to
pay under a guarantee is its principal amount as disclosed in the
table above. NWM N.V. Group expects most guarantees it
- these include standby letters of
credit, supporting customer debt issues and contingent liabilities
relating to customer trading activities such as those arising from
- under a loan commitment
NWM N.V. Group agrees to make funds available to a customer
in the future. Loan commitments, which are usually for a
specified term may be unconditionally cancellable or may persist,
provided all conditions in the loan facility are satisfied or waived.
Commitments to lend include commercial standby facilities and
credit lines, liquidity facilities to commercial paper conduits and
unutilised overdraft facilities.
Other commitments
-
these include documentary credits, which
are commercial letters of credit providing for payment by NWM
N.V. Group to a named beneficiary against presentation of
specified documents, forward asset purchases, forward deposits
placed and undrawn note issuance and revolving underwriting
facilities, and other short-term trade related transactions.
Risk-sharing agreements
NWM Plc and NWM N.V. have limited risk-sharing arrangements
in place to facilitate the smooth provision of services to NatWest
Markets’ customers.
The arrangements, which NWM Plc recognises as financial
guarantees within Amounts due to subsidiaries, include:
•
The provision of a funded guarantee of up to €0.8 billion by
NWM Plc to NWM N.V. that limits NWM N.V.’s exposure to
large individual customer credits. Funding is provided by
NWM Plc deposits placed with NWM N.V. of not less than the
guaranteed amount.
At 31 December 2025 the deposits
amounted to €0.1 billion and the guaranteed fees in the year
were €1.2 million.
•
The provision of unfunded guarantees by NWM Plc in respect
of NWM N.V.’s legacy portfolio. At 31 December 2025 the
exposure at default covered by the guarantees was
approximately €8 million (of which none cash collateralised).
Fees of €0.3 million in relation to the guarantees were
recognised in the year.
Obligations with ABN AMRO Bank N.V.
Included within guarantees as at 31 December 2025 is €0.5
billion (2024 - €0.5 billion), which relates to NWM N.V. Group’s
obligations over liabilities held within the Dutch State acquired
businesses included in ABN AMRO Bank N.V.
On the division of an entity by demerger, Dutch law establishes a
cross liability between surviving entities in respect of the creditors
at the time of the demerger. NWM N.V. Group’s cross liability is
limited by law to the lower of its equity and the eligible debts of
ABN AMRO Bank N.V. on 6 February 2010. The likelihood of
NWM N.V. and certain members of NatWest Group are party to
various legal proceedings and are involved in, or subject to,
various regulatory matters, including as the subject of
investigations and other regulatory and governmental action
(Matters) in the Netherlands, the United Kingdom (UK), the
European Union (EU), the United States (US) and other
jurisdictions.
NWM N.V. Group recognises a provision for a liability in relation
to these matters when it is probable that an outflow of economic
benefits will be required to settle an obligation resulting from past
events, and a reliable estimate can be made of the amount of the
obligation.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
95
22 Memorandum items continued
In many of the Matters, it is not possible to determine whether
any loss is probable or to estimate reliably the amount of any
loss, either as a direct consequence of the relevant proceedings
and regulatory matters or as a result of adverse impacts or
restrictions on NWM N.V. Group’s reputation, businesses and
operations. Numerous legal and factual issues may need to be
resolved, including through potentially lengthy discovery and
document production exercises and determination of important
factual matters, and by addressing novel or unsettled legal
questions relevant to the proceedings in question, before the
probability of a liability, if any, arising can reasonably be
estimated in respect of any Matter. NWM N.V. Group cannot
predict if, how, or when such claims will be resolved or what the
eventual settlement, damages, fine, penalty or other relief, if any,
may be, particularly for Matters that are at an early stage in
their development or where claimants seek substantial or
indeterminate damages.
There are situations where NWM N.V. Group may pursue an
approach that in some instances leads to a settlement
agreement. This may occur in order to avoid the expense,
management distraction or reputational implications of continuing
to contest liability, or in order to take account of the risks
inherent in defending or contesting Matters, even for those for
which NWM N.V. Group believes it has credible defences and
should prevail on the merits. The uncertainties inherent in all
Matters affect the amount and timing of any potential economic
outflows for both matters with respect to which provisions have
been established and other contingent liabilities in respect of any
such Matter.
It is not practicable to provide an aggregate estimate of potential
liability for our Matters as a class of contingent liabilities.
The future economic outflow in respect of any matter may
ultimately prove to be substantially greater than, or less than, the
aggregate provision, if any, that NWM N.V. Group has recognised
in respect of such Matter. Where a reliable estimate of the
economic outflow cannot be reasonably made, no provision has
been recognised.
Matters which are, or could be, material, either individually or in
aggregate, having regard to NWM N.V. Group, considered as a
whole, in which NWM N.V. Group is currently involved are set out
below. We have provided information on the procedural history of
certain Matters, where we believe appropriate, to aid the
understanding of the Matter.
NatWest Group is involved in ongoing litigation and regulatory
matters that are not described below but are described on pages
365 to 369 in NatWest Group’s Annual Report and Accounts
2025. NatWest Group expects that in future periods, additional
provisions and economic outflows relating to Matters that may or
may not be currently known by NatWest Group will be
necessary, in amounts that are expected to be substantial in
some instances. While NWM N.V. Group may not be directly
involved in such NatWest Group matters, any final adverse
outcome of those matters may also have an adverse effect on
NWM N.V. Group.
For a discussion of certain risks associated with NWM N.V.
Group’s litigation and regulatory matters (including the Matters),
see the Risk Factor relating to legal, regulatory and governmental
actions and investigations set out on pages 141 to 143.
Litigation
FX litigation
In December 2021, a summons was served in the Netherlands
against NatWest Group plc, NWM Plc and NWM N.V. by Stichting
FX Claims on behalf of a number of parties, seeking declarations
from the court concerning liability for anti-competitive FX market
conduct described in decisions of the European Commission (EC)
of 16 May 2019, along with unspecified damages. The claimant
amended its claim to also refer to a 2 December 2021 decision
by the EC, which described anti-competitive FX market conduct.
NatWest Group plc, NWM Plc and other defendants contested
the jurisdiction of the Dutch court. In March 2023, the district
court in Amsterdam accepted that it has jurisdiction to hear
claims against NWM N.V. but refused jurisdiction to hear any
claims against the other defendant banks (including NatWest
Group plc and NWM Plc) brought on behalf of the parties
represented by the claimant that are domiciled outside of the
Netherlands. The claimant is appealing that decision.
The defendant banks have brought cross-appeals which seek a
ruling that the Dutch court has no jurisdiction to hear any claims
against the defendant banks domiciled outside of the
Netherlands, irrespective of whether the claim has been brought
on behalf of a party represented by the claimant that is domiciled
within or outside of the Netherlands. The Amsterdam Court of
Appeal has stayed these appeal proceedings until the Court of
Justice of the European Union has answered preliminary
questions that have been referred to it in another matter.
In September 2023, a second summons was served by Stichting
FX Claims on NatWest Group plc, NWM Plc and NWM N.V., on
behalf of a new group of parties. The claimant seeks declarations
from the district court in Amsterdam concerning liability for anti-
competitive FX market conduct described in the above
referenced decisions of the EC of 16 May 2019 and 2 December
2021, along with unspecified damages. NatWest Group plc, NWM
Plc and other defendants are contesting the Dutch court's
jurisdiction. The district court has stayed the proceedings pending
judgment in the above-mentioned appeals.
In January 2025, a third summons was served by Stichting FX
Claims on NatWest Group plc, NWM Plc and NWM N.V., on
behalf of another new group of parties. The claimant seeks
similar declarations from the district court in Amsterdam to those
being sought in the above-mentioned claims, along with
unspecified damages.
NatWest Group plc, NWM Plc and other defendants are
contesting the Dutch court's jurisdiction. The district court has
stayed the proceedings pending judgment in the above-
mentioned appeals.
Certain other foreign exchange transaction related claims have
been or may be threatened. NWM N.V Group cannot predict
whether all or any of these claims will be pursued.
Madoff
NWM N.V. was named as a defendant in two actions filed by the
trustee for the bankrupt estates of Bernard L. Madoff and
Bernard L. Madoff Investment Securities LLC, in bankruptcy
court in New York, which together seek to clawback more than
US$300 million (plus pre-judgment interest) that NWM N.V.
allegedly received from certain Madoff feeder funds and certain
swap counterparties.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
96
22 Memorandum items continued
The claims were previously dismissed, but as a result of an
August 2021 decision by the US Court of Appeals, they are now
proceeding in the discovery phase in the bankruptcy court,
where they have been consolidated into one action.
US Anti-Terrorism Act litigation
NWM N.V. and certain other financial institutions are defendants
in several actions filed by a number of US nationals (or their
estates, survivors, or heirs), most of whom are, or were, US
military personnel who were killed or injured in attacks in Iraq
between 2003 and 2011.
NWM Plc is also a defendant in some of these cases.
According to the plaintiffs’ allegations, the defendants are liable
for damages arising from the attacks because they allegedly
conspired with and/or aided and abetted Iran and certain Iranian
banks to assist Iran in transferring money to Hezbollah and the
Iraqi terror cells that committed the attacks, in violation of the US
Anti-Terrorism Act, by agreeing to engage in ‘stripping’ of
transactions initiated by the Iranian banks so that the Iranian
nexus to the transactions would not be detected.
The first of these actions, alleging conspiracy claims but not
aiding and abetting claims, was filed in the United States District
Court for the Eastern District of New York in November 2014. In
September 2019, the district court dismissed the case, finding
that the claims were deficient for several reasons, including lack
of sufficient allegations as to the alleged conspiracy and
causation. In January 2023, the US Court of Appeals affirmed the
district court’s dismissal of this case.
On 30 September 2025, the district court denied a motion by the
plaintiffs to re-open the case to asset aiding and abetting claims
that they previously did not assert. Another action, filed in the
SDNY in 2017, which asserted both conspiracy and aiding and
abetting claims, was dismissed by the SDNY in March 2019 on
similar grounds as the first case, but remains subject to appeal to
the US Court of Appeals.
Other follow-on actions that are substantially similar to those
described above are pending in the same courts.
Tandanor Litigation in Argentina
In October 2012, a claim was filed in the District Court of Buenos
Aires by ‘Argentina Talleres Navales Dársena Norte Sociedad
Anónima Comercial, Industrial y Naviera’ (“Tandanor”) (a naval
repair business) against what is now the Representative Office of
The Royal Bank of Scotland N.V., Argentine Branch (in liquidation)
(the “Representative Office”) and eleven private individuals. (The
Representative Office inherited the claim from Banco Holandés
Unido, Argentine Branch.)
The claim, which was unquantified,
sought damages for alleged fraudulent conduct during
Tandanor’s privatisation, which concluded in 1993. The
Representative Office’s participation in the privatisation was
2.9%. The Argentine Ministry of Defence joined Tandanor as a
plaintiff in 2014.
The claim was dismissed on limitation grounds in 2018, and the
plaintiffs were unsuccessful in subsequent appeals. In November
2024, however, the Argentine Supreme Court set the appealed
judgments aside and, in June 2025, the Argentine Federal Court
of Appeal returned the case to the Argentine Federal District
Court for further consideration. In December 2025, the plaintiffs
filed an update quantifying damages at USD1.1bn. The
Representative Office continues to defend the claim and has
requested a hearing.
Regulatory matters
NWM N.V. Group’s financial condition can be affected by the
actions of various governmental and regulatory authorities in the
Netherlands, the UK, the EU, the US and elsewhere. NatWest
Group has engaged, and will continue to engage, in discussions
with relevant governmental and regulatory authorities, including
in the Netherlands, the UK, the EU, the US and elsewhere, on an
ongoing and regular basis, and in response to informal and
formal inquiries or investigations, regarding operational, systems
and control evaluations and issues including those related to
compliance with applicable laws and regulations, including
consumer protection, investment advice, business conduct,
competition/anti-trust, VAT recovery, anti-bribery, anti-money
laundering and sanctions regimes.
Any matters discussed or identified during such discussions and
inquiries may result in, among other things, further inquiry or
investigation, other action being taken by governmental and
regulatory authorities, increased costs being incurred by NWM
N.V. Group, remediation of systems and controls, public or
private censure, restriction of NWM N.V. Group’s business
activities and/or fines. Any of these events or circumstances
could have a material adverse effect on NWM N.V. Group, its
business, authorisations and licences, reputation, results of
operations or the price of securities issued by it, or lead to
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
97
This note shows non-cash items adjusted for in the cash flow statement and movement in operating assets and liabilities.
2025 | 2024 | |
€m | €m | |
Impairment losses/(releases) | 5 | (1) |
Depreciation and amortisation | 2 | 2 |
Change in fair value taken to profit or loss on subordinated liabilities | (13) | 7 |
Elimination of foreign exchange differences | 49 | (62) |
Foreign exchange recycling gains | (3) | - |
Other non-cash items | (20) | 7 |
Income receivable on other financial assets | (67) | (131) |
Loss on sale of other financial assets | - | 1 |
Interest payable on subordinated liabilities | 8 | 10 |
Charges and releases of provisions | 8 | - |
Non-cash and other items | (31) | (167) |
Change in operating assets and liabilities | ||
Change in trading assets | (1,178) | (2,825) |
Change in derivative assets | 3,053 | (1,981) |
Change in settlement balance assets | 754 | (301) |
Change in loans to banks | (406) | - |
Change in loans to customers | (493) | 16 |
Change in amounts due from holding companies and fellow subsidiaries | 34 | 12 |
Change in other financial assets | 1 | - |
Change in other assets | 1 | - |
Change in bank deposits | 378 | 186 |
Change in customer deposits | 1,969 | (1,532) |
Change in amounts due to holding companies and fellow subsidiaries | (446) | (1,394) |
Change in settlement balance liabilities | (503) | 6 |
Change in trading liabilities | (310) | 2,424 |
Change in derivative liabilities | (3,179) | 1,696 |
Change in other financial liabilities | 306 | 552 |
Change in other liabilities | 3 | 2 |
Change in operating assets and liabilities | (16) | (3,139) |
24 Analysis of changes in financing during the year
Share capital, share premium and | ||||
paid-in equity | Subordinated liabilities (1) | |||
2025 | 2024 | 2025 | 2024 | |
€m | €m | €m | €m | |
At 1 January | 1,800 | 1,800 | 453 | 443 |
Issued | - | - | - | - |
Redeemed | - | - | - | - |
Interest paid | - | - | (8) | (12) |
Net cash flows from financing activities | - | - | (8) | (12) |
Issue of other equity instruments: Additional Tier 1 capital notes | - | 250 | ||
Redemption of other equity instruments: Additional Tier 1 capital notes | - | (250) | ||
Effects of foreign exchange | (2) | 2 | ||
Changes in fair value | (13) | 7 | ||
Interest payable | 8 | 10 | ||
Other | - | - | 2 | 3 |
At 31 December | 1,800 | 1,800 | 440 | 453 |
(1)
Subordinated liabilities include intercompany subordinated liabilities for the purpose of cash flow statement.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
98
In the cash flow statement, cash and cash equivalents comprises cash, loans to banks and treasury bills with an original maturity of
less than three months that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.
2025 | 2024 | |
€m | €m | |
Cash and balances at central banks | 7,608 | 6,187 |
Trading assets (1) | 782 | 2,138 |
Loans to banks including intragroup balances | 799 | 693 |
Cash and cash equivalents | 9,189 | 9,018 |
(1)
Includes cash collateral posted with bank counterparties in respect of derivative liabilities is €559 million (2024 - €1,004 million).
which they operate. The NWM N.V. Group had mandatory reserve deposits with De Nederlandsche Bank N.V. of €100 million (2024 -
Remuneration of the Managing Board
The Managing Board during the year comprised the following
members:
(1)
V. Goedegebuure
(2)
C. Visscher
(3)
B. Achmann
(4)
M. van Wieringen
Members receive pension benefits through their employment in
NWM N.V. Group.
The remuneration of the Managing Board is presented in
aggregate in the table below. NatWest Group plc and its
subsidiaries adhere to relevant statutory requirements and
NatWest Group discloses individual remuneration of NatWest
Group executive directors, compliant with the UK PRA
Remuneration Code.
Total compensation for the Managing Board members has been
benchmarked against similar roles in the NWM N.V. Group peer
group in Europe. The outcome of the benchmarking confirms
their 2025 total actual compensation is below the market
medium and in line with the requirements set out in the Dutch
Banking Code.
2025 | 2024 | |
€000 | €000 | |
Salaries and short-term benefits | 2,114 | 1,589 |
Pensions | 370 | 265 |
Profit sharing and bonus payments | 454 | 450 |
Total | 2,938 | 2,304 |
(1)
There are no loans from NWM N.V. Group to the Managing Board members.
(2)
The vesting of long-term incentive awards in the form of shares in NatWest Group will normally be subject to the satisfaction of financial and non-financial performance conditions. The
performance conditions will be set by the NatWest Group Performance and Remuneration Committee for each award. In addition, awards will only vest to the extent the Committee is
satisfied that the vesting outcome reflects underlying financial results and if conduct and risk management during the performance period has been effective.
Remuneration of the Supervisory Board
The Supervisory Board during the year comprised the following
members:
(1)
M. Klessens
(2)
A. van der Pauw
(3)
R. Begbie
(4)
J. Alvaro (from 23 September 2025)
(5)
S. Billion (from 15 October 2025)
(6)
C. von Schmettow (from 2 December 2025)
(7)
F. Dangeard (until 23 April 2025)
The Supervisory Board included members employed elsewhere
within NatWest Group.
The table below provides information on the remuneration of the
Supervisory Board in aggregate.
2025 | 2024 | |
€000 | €000 | |
Remuneration (1) | 299 | 252 |
(1)
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
99
27 Related parties
UK Government
In May 2025, the UK Government through His Majesty’s Treasury
(HMT) sold its remaining shareholding in NatWest Group plc.
Under UK listing rules the UK Government and UK Government-
controlled bodies remained related parties until 12 July 2025, 12
months after the UK Government shareholding in NatWest Group
plc fell below 20%.
Transfer pricing
NWM N.V. is a party to transfer pricing arrangements with NWM
Plc. Arm’s length transfer pricing legislation in both the
Netherlands and UK requires that, for transactions between
related parties, each entity is remunerated on the same basis as
two independent parties negotiating a contract covering similar
activities. The transfer pricing arrangements between NWM N.V.
and NWM Plc require approval by both counterparties.
For each of the main business line interactions with NWM Plc
individual transfer pricing models are in place. Each type of
transaction relies on a transfer pricing model with an appropriate
remuneration, based on cost-plus, (hurdle rate of) return on
equity or revenue split. Under the 2025 transfer pricing
arrangements, NWM N.V. reported income of €156 million (2024
- €153 million) for the activities it performed for European
customers as part of the NWM Plc post Brexit operating model.
The at arm’s length nature of the transfer pricing arrangements
is confirmed by transfer pricing documentation which has been
prepared by an external expert.
- NWM N.V. Group
management has concluded it is probable that the Dutch and UK
tax authorities will accept the current transfer pricing models.
The transfer pricing models are sensitive to parameters used,
such as the mark-ups and the return on capital. The tax
authorities could have a different interpretation of the OECD
Transfer Pricing Guidelines and / or facts and circumstances.
Any adjustments requested by the Dutch and UK tax authorities
to the current transfer pricing models may therefore have a
material impact on NWM N.V. Group’s non-interest income and
hence its taxable profit and unused taxable losses and tax
credits. For the cost-plus, NWM N.V. Group has considered a
range of mark-ups from benchmarking studies. Applying the
lower quartiles of the benchmarks used for the cost-plus
calculations and reducing the return on equity percentage by 2%,
would decrease the transfer pricing income by €12 million to
€144 million. Applying the upper quartiles of the benchmarks
used for the cost-plus calculations and increasing the return on
equity percentage by 2%, would increase the transfer pricing
NatWest Bank Europe GmbH transfers
In December 2024, it was announced that NWM N.V. would
become NatWest Group’s primary European corporate and
institutional customer-facing entity. As part of this strategic
transition, new Structured Finance origination ceased in NWBE
and commenced in NWM N.V. from May 2025. In 2025, €0.7
billion (2024 – nil) of loans to customers were transferred from
NWBE to NWM N.V. An amount of €0.7 billion (2024 – nil) of
contingent liabilities and commitments was transferred from
NWBE to NWM N.V. Consideration for the transfers was equal to
the carrying amounts of the transferred exposures and the
transactions were conducted on an arm’s length basis. The
transfers did not result in any gain, loss, or amounts to be
recognised in future periods. In addition, certain loans were
subject to funded sub-participation arrangements with NatWest
Bank Plc that transfer substantially all risks and rewards of
ownership. These arrangements include provisions for undrawn
commitments and collateral pledges. Loans subject to such
sub-participation arrangements were not recognised on NWM
N.V.’s balance sheet and are not included in the amounts
disclosed above, while NatWest Bank Plc recognised the
exposure to the underlying borrowers.
Other related parties
(a)
In accordance with IAS 24, transactions, or balances between
NWM N.V. Group entities that have been eliminated on
consolidation are not reported.
(b)
NWM N.V. Group is recharged from other NatWest Group
entities, mainly NWB Plc which provides the majority of
shared services (including technology) and operational
processes.
(c) The primary financial statements include transactions and
balances with its subsidiaries which have been further
disclosed in the relevant parent company notes
.
Notes to the consolidated financial statements continued
NatWest Markets N.V.
Annual Report and Accounts 2025
100
27 Related parties continued
Holding companies and fellow subsidiaries
Transactions NWM N.V. Group enters with its holding companies and fellow subsidiaries also meet the definition of related party
transactions. The table below discloses transactions between NWM N.V. Group and fellow subsidiaries of NatWest Group.
2025 | 2024 | |||||
Holding companies | Fellow subsidiaries | Total | Holding companies | Fellow subsidiaries | Total | |
€m | €m | €m | €m | €m | €m | |
Interest receivable | 5 | - | 5 | 3 | - | 3 |
Interest payable | (36) | - | (36) | (49) | - | (49) |
Fees and commissions receivable | 157 | - | 157 | 153 | - | 153 |
Fees and commissions payable | (2) | (4) | (6) | (5) | (3) | (8) |
Other administration expenses (1) | (8) | (58) | (66) | (10) | (44) | (54) |
116 | (62) | 54 | 92 | (47) | 45 | |
(1) Includes internal service recharges of €66 million (2024 - €54 million).
Amounts due from/to holding companies and fellow subsidiaries are as below:
| 2025 | 2024 | |||||
Holding company | Fellow subsidiaries | Total | Holding company | Fellow subsidiaries | Total | |
€m | €m | €m | €m | €m | €m | |
Assets | ||||||
Trading assets | 770 | 51 | 821 | 1,111 | - | 1,111 |
Loans to banks - amortised cost | 260 | 7 | 267 | 40 | 3 | 43 |
Loans to customers - amortised cost | 19 | - | 19 | 21 | - | 21 |
Settlement balances | 165 | - | 165 | 12 | - | 12 |
Other assets | 21 | - | 21 | 16 | - | 16 |
Amounts due from holding | ||||||
companies and fellow subsidiaries | 1,235 | 58 | 1,293 | 1,200 | 3 | 1,203 |
Derivatives (1) | 2,994 | - | 2,994 | 4,061 | - | 4,061 |
Liabilities | ||||||
Trading liabilities | 1,166 | 5 | 1,171 | 1,218 | - | 1,218 |
Bank deposits - amortised cost | 685 | - | 685 | 1,010 | - | 1,010 |
Customer deposits - amortised cost | - | 2 | 2 | - | 2 | 2 |
Other financial liabilities - subordinated | ||||||
liabilities | 150 | - | 150 | 150 | - | 150 |
Settlement balances | 75 | - | 75 | 147 | - | 147 |
Other liabilities | 10 | 18 | 28 | 16 | 15 | 31 |
Amounts due to holding companies | ||||||
and fellow subsidiaries | 2,086 | 25 | 2,111 | 2,541 | 17 | 2,558 |
Derivatives (1) | 2,218 | - | 2,218 | 4,004 | - | 4,004 |
(1)
In January 2026, the Managing Board, with the approval of the Supervisory Board, proposed to the General Meeting an ordinary
dividend of €117 million in respect of the unappropriated 2025 result, and an ordinary dividend of €53 million from prior year earnings.
As these approvals took place after the reporting date, no dividend liability is recognised at 31 December 2025. The dividends will be
submitted for adoption at the forthcoming General Meeting of Shareholders.
Other than as disclosed in the accounts, there have been no other significant events between 31 December 2025 and the date of
Parent company financial statements and notes
NatWest Markets N.V.
Annual Report and Accounts 2025
101
Basis of preparation
NWM N.V. financial statements are prepared in accordance with the requirements in Title
9 Book 2 of the Dutch Civil Code. The NWM
N.V. Group prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as
adopted by the EU. The accounting policies applied in NWM N.V. financial statements are the same as those applied in the
consolidated financial statements on pages 59 to 62.
Investments in subsidiaries are accounted for using the equity method.
The financial statements are presented in euros, which is the presentation currency of the NWM N.V. Refer to Accounting policies in
the consolidated financial statements for further information on going concern.
Future accounting developments
International Financial Reporting Standards
A number of amendments to IFRS standards were in issue at 31 December 2025 and effective from 1st January 2026 or later. NWM is
assessing the effect of adopting the accounting developments effective from 1 January 2027 on its financial statements and has largely
completed a similar assessment for the Amendments to IFRS 9 and IFRS 7 effective from 1 January 2026. It does not expect any to
have a material impact, noting that the parent company will continue to prepare its financial statements in accordance with Title 9
Book 2 of the Dutch Civil Code and therefore will not be subject to the presentation and disclosure requirements of IFRS 18.
Company income statement for the year ended 31 December 2025
2025
2024
Note
€m
€m
Interest receivable
329
498
Interest payable
(255)
(382)
Net interest income
1
74
116
Income from subsidiaries
13
1
(4)
Fees and commissions receivable
242
236
Fees and commissions payable
(28)
(29)
Net fees and commissions income
2
214
207
Results from financial transactions
2
7
(20)
Other income
2
6
-
Total income
302
299
Staff costs
3
(94)
(83)
Other expenses
(113)
(91)
Depreciation and amortisation
(2)
(2)
Operating expenses before impairment (losses)/releases
(209)
(176)
Impairment (losses)/releases
12
(5)
1
Operating expenses including impairment (losses)/releases
(214)
(175)
Operating profit before tax
88
124
Tax credit
5
45
35
Profit for the year
133
159
Attributable to:
Ordinary shareholders
117
135
Paid-in equity holders
16
24
133
159
The accompanying notes on pages 104 to 117 form an integral part of these financial statements.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
102
Company balance sheet as at 31 December 2025 (before appropriation of result)
2025
2024
Note
€m
€m
Assets
Cash and balances at central banks
9
7,608
6,187
Short term government paper
9
399
488
Loans to banks
(1), (2)
4,9,12
5,070
6,066
Loans to customers
(3), (4)
4,9,12
4,566
2,912
Derivatives
(5)
7
8,791
11,860
Debt securities
6
1,555
1,617
Investments in subsidiaries
13
56
109
Property and equipment
15
6
8
Other assets
(6)
14
466
1,003
Total assets
28,517
30,250
Bank deposits
(7)
9
7,356
6,437
Customer deposits
(8)
9
7,906
6,982
Derivatives
(9)
7
7,331
10,510
Debt securities in issue
8
3,008
2,897
Other liabilities
(10)
18
346
916
Provisions
18
17
12
Subordinated liabilities
(11)
17
440
453
Total liabilities
26,404
28,207
Share capital and share premium account
1,550
1,550
Revaluation reserves
9
31
Legal reserves
52
60
Other reserves
135
47
Paid-in equity
250
250
Unappropriated results
117
105
Total equity
20,21
2,113
2,043
(1)
Loans to banks include amounts due from holding company and fellow subsidiaries of €1,036 million (2024 - €1,154 million).
(2)
Loans to banks include amounts held for trading of €4,205 million (2024 - €5,842 million). Of this €3,621 million is reverse repos (2024 - €4,644 million). Collateral given €559 million (2024
- €1,001 million). Other loans €25 million (2024 - €197 million).
(3)
Loans to customers include amounts due from holding company and fellow subsidiaries of €51 million (2024 - €21 million).
(4)
Loans to customers include amounts held for trading of €3,125 million (2024 - €1,956 million). Of this €1,808 million is reverse repos (2024 - €761 million). Collateral given €1,308 million
(2024 - €1,078 million). Other loans €9 million (2024 - €117 million).
(5)
Derivative assets include amounts due from holding company and fellow subsidiaries of €2,994 million (2024 - €4,061 million).
(6)
Other assets include amounts due from holding company and fellow subsidiaries of €187 million (2024 - €28 million).
(7)
Bank deposits include amounts due to holding company and fellow subsidiaries of €1,852 million (2024 - €2,228 million).
(8)
Customer deposits include amounts due to holding company and fellow subsidiaries of €46 million (2024 – €62 million).
(9)
Derivative liabilities include amounts due to holding company and fellow subsidiaries of €2,218 million (2024 - €4,004 million).
(10)
Other liabilities include amounts due to holding company and fellow subsidiaries of €103 million (2024 - €176 million).
(11)
Subordinated liabilities include amounts due to holding company and fellow subsidiaries of €150 million (2024 - €150 million).
(12)
As at 31 December 2025 contingent liabilities and commitments were €8,145 million (2024 - €7,470 million).
The accompanying notes on pages 104 to 117 form an integral part of these financial statements.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
103
Company statement of changes in equity for the year ended 31 December 2025
2025
2024
€m
€m
Share capital and share premium at 1 January and 31 December
(1)
1,550
1,550
Revaluation reserves
At 1 January
31
26
Changes in equity securities and debt securities at FVOCI
-
2
Changes in cash flow hedge reserve
(2) (3)
(22)
3
At 31 December
9
31
Legal reserves
At 1 January
60
103
Changes in non-distributable profit participations
(8)
(43)
At 31 December
52
60
Other reserves
At 1 January
47
20
Transfer from unappropriated results
105
10
Changes in non-distributable profit participations
4
43
Changes in fair value of credit in financial liabilities designated at FVTPL
(21)
(27)
Other movements
-
1
At 31 December
135
47
Paid-in equity
At 1 January
250
250
Redeemed
-
(250)
Issued
-
250
At 31 December
250
250
Unappropriated results
At 1 January
105
52
Transfer to other reserves
(105)
(10)
Net result for the year
133
159
Paid-in equity interim dividends paid
(16)
(24)
Ordinary dividends paid
-
(72)
At 31 December
117
105
Total equity as at 31 December
2,113
2,043
(1)
Includes ordinary share capital of €50,004 (2024 - €50,004). Refer to Note 20 for further details.
(2)
The change in the cash flow hedging reserve is driven by realised accrued interest transferred into the income statement and an increase in swap rates in the year. The portfolio of
hedging instruments are predominantly receive fixed swaps.
(3)
The amount transferred from equity to the income statement is mostly recorded within net interest income within balances at central banks.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
104
1 Net interest income
2025
2024
€m
€m
Loans to customers
55
58
Balances at central banks and loans to banks
204
309
Amounts due from holding companies and fellow subsidiaries
5
3
Other financial assets
65
128
Interest receivable
329
498
Bank deposits
22
19
Customer deposits
120
187
Amounts due to holding companies and fellow subsidiaries
36
49
Subordinated liabilities
1
1
Other financial liabilities
76
126
Interest payable
255
382
Net interest income
74
116
2 Non-interest income
2025
2024
€m
€m
Fees and commissions receivable
242
236
Fees and commissions payable
(28)
(29)
Net fees and commissions
(1)
214
207
Results from financial transactions
7
(20)
Other income
6
-
(1)
Fees and commissions is mainly driven by transfer pricing income from NWM Plc (in the UK) of €156 million (2024 - €153 million).
Refer to Note 2 and Note 27 to the consolidated financial statements for further details.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
105
3 Operating expenses
2025
2024
€m
€m
Wages and salaries
77
66
Social security costs
11
11
Pension costs
6
6
- defined contribution schemes
6
6
Staff costs
94
83
There were 255 persons employed at 31 December 2025 (2024 - 253). The average number of persons employed during the year
was 254 (2024 - 249).
This includes 123 persons which were employed in the Netherlands at 31 December 2025 (2024 - 121). The average number of
persons employed in the Netherlands during the year was 122 (2024 - 121).
Refer to Note 5 to the consolidated financial statements for details on auditor’s remuneration
.
4 Geographical segmental analysis
The geographical analyses in the tables below have been compiled on the basis of location of the counterparty.
Netherlands
Rest of Europe
RoW
Total
2025
€m
€m
€m
€m
Loans - amortised cost and FVOCI
118
1,434
465
2,017
2024
Loans - amortised cost and FVOCI
80
668
359
1,107
Refer to Note 4 to the consolidated financial statements for further details on segments.
5 Tax
Refer to Note 6 to the consolidated financial statements for further details.
6 Debt securities - assets
Debt securities
Central and local
Financial
government - US
institutions
Other debt
Total
2025
€m
€m
€m
€m
Fair value through other comprehensive income
-
291
-
291
Amortised cost
-
-
1,264
1,264
Total
-
291
1,264
1,555
2024
Fair value through other comprehensive income
-
102
-
102
Amortised cost
-
-
1,515
1,515
Total
-
102
1,515
1,617
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
106
7 Derivatives
NWM N.V uses derivatives as part of its trading activities or to manage its own risk such as interest rate, or credit risk.
The following table shows the notional amounts and fair values of NWM N.V.’s derivatives.
2025
2024
Notional
Assets
Liabilities
Notional
Assets
Liabilities
€bn
€m
€m
€bn
€m
€m
Exchange rate contracts
427
4,831
4,744
432
7,886
7,865
Interest rate contracts
1,451
3,958
2,580
1,230
3,974
2,638
Credit derivatives
-
2
7
-
-
7
Total
1,878
8,791
7,331
1,662
11,860
10,510
Refer to Note 11 to the consolidated financial statements for further details.
8 Debt securities in issue - liabilities
Debt Securities in Issue in both periods represent listed and unlisted instruments. Refer to Note 15 to the consolidated financial
statements for further details.
9 Financial instruments – classification
The following tables analyse NWM N.V.’s financial assets and liabilities in accordance with the categories of financial instruments in
IFRS 9.
MFVTPL
FVOCI
Amortised
cost
Other assets
Total
€m
€m
€m
€m
€m
Assets
Cash and balances at central banks
7,608
7,608
Short term government paper
-
399
-
399
Loans to banks
(1)
4,205
-
865
5,070
Loans to customers
(1)
3,125
-
1,441
4,566
Derivatives
8,791
8,791
Debt securities
-
291
1,264
1,555
Investments in subsidiaries
56
56
Property and equipment
6
6
Other assets
277
189
466
31 December 2025
16,121
690
11,455
251
28,517
Cash and balances at central banks
6,187
6,187
Short term government paper
-
488
-
488
Loans to banks
(1)
5,842
-
224
6,066
Loans to customers
(1)
1,956
-
956
2,912
Derivatives
11,860
11,860
Debt securities
-
102
1,515
1,617
Investments in subsidiaries
109
109
Property and equipment
8
8
Other assets
877
126
1,003
31 December 2024
19,658
590
9,759
243
30,250
For the notes to this table refer to the following page.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
107
9 Financial instruments – classification continued
Held-for-
trading
DFV
Amortised
cost
Other
liabilities
Total
€m
€m
€m
€m
€m
Liabilities
Bank deposits
(2)
5,696
-
1,660
7,356
Customer deposits
(2)
2,226
670
5,010
7,906
Derivatives
7,331
7,331
Debt securities in issue
-
466
2,542
3,008
Other liabilities
(3)
-
-
264
82
346
Provisions
1
16
17
Subordinated liabilities
271
169
440
31 December 2025
15,253
1,407
9,646
98
26,404
Bank deposits
(2)
4,830
-
1,607
6,437
Customer deposits
(2)
3,449
471
3,062
6,982
Derivatives
10,510
10,510
Debt securities in issue
-
369
2,528
2,897
Other liabilities
(3)
-
-
840
76
916
Provisions
1
11
12
Subordinated liabilities
281
172
453
31 December 2024
18,789
1,121
8,210
87
28,207
(1)
Includes third party reverse repos of €2,873 million (2024 - €3,727 million) in loans to banks, and €1,757 million (2024 - €761 million) in loans to customers.
(2)
Includes third party repos of €4,067 million (2024 - €3,124 million) in bank deposits, and €357 million (2024 - €1,148 million) in customer deposits.
(3)
Includes lease liabilities of €6 million (2024 - €8 million).
Financial instruments – financial assets and liabilities that can be offset
The tables below present information on the NWM N.V.’s financial assets and liabilities that are offset in the balance sheet under IFRS
or subject to enforceable master netting agreement together with financial collateral received or given.
Instruments which can be offset
Potential for offset not recognised by IFRS
Gross
IFRS offset
Balance sheet
Effect of
master netting
and similar
agreements
Cash collateral
Securities
collateral
Net amount
after effect of
netting
agreements
and related
collateral
Instruments
outside netting
agreements
Balance sheet
total
2025
€m
€m
€m
€m
€m
€m
€m
€m
€m
Derivative assets
17,226
(8,471)
8,755
(4,887)
(2,995)
(621)
252
36
8,791
Derivative liabilities
17,041
(9,802)
7,239
(4,887)
(1,698)
(352)
302
92
7,331
Net position
(1)
185
1,331
1,516
-
(1,297)
(269)
(50)
(56)
1,460
Trading reverse repos
5,470
(855)
4,615
(156)
-
(4,459)
-
15
4,630
Trading repos
5,279
(855)
4,424
(156)
-
(4,268)
-
-
4,424
Net position
191
-
191
-
-
(191)
-
15
206
2024
Derivative assets
20,822
(9,006)
11,816
(7,875)
(2,550)
(886)
505
44
11,860
Derivative liabilities
20,731
(10,312)
10,419
(7,875)
(1,947)
(117)
480
91
10,510
Net position
(1)
91
1,306
1,397
-
(603)
(769)
25
(47)
1,350
Trading reverse repos
4,582
(122)
4,460
(217)
-
(4,243)
-
29
4,489
Trading repos
4,394
(122)
4,272
(217)
-
(4,055)
-
-
4,272
Net position
188
-
188
-
-
(188)
-
29
217
(1)
The net IFRS offset balance of €1,331 million (2024 – €1,306
million) relates to variation margin netting reflected on other balance sheet lines.
(2)
Excludes balances with holding company and fellow group subsidiaries.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
108
10 Financial instruments – valuation
For further information relating to the following tables, refer to Note 8 to the consolidated financial statements.
Valuation hierarchy
The following table shows the financial instruments carried at fair value on the balance sheet by valuation hierarchy.
2025
2024
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
€m
€m
€m
€m
€m
€m
€m
€m
Assets
Short term government paper
399
-
-
399
488
-
-
488
Loans to banks
-
4,205
-
4,205
-
5,842
-
5,842
Loans to customers
-
3,125
-
3,125
-
1,848
108
1,956
Derivatives
-
8,752
39
8,791
-
11,799
61
11,860
Debt securities
-
291
-
291
-
102
-
102
Total financial assets held at fair value
399
16,373
39
16,811
488
19,591
169
20,248
Liabilities
Bank deposits
-
5,696
-
5,696
-
4,830
-
4,830
Customer deposits
-
2,865
31
2,896
-
3,920
-
3,920
Derivatives
-
7,274
57
7,331
-
10,416
94
10,510
Debt securities in issue
-
466
-
466
-
369
-
369
Subordinated liabilities
-
271
-
271
-
281
-
281
Total financial liabilities held at fair value
-
16,572
88
16,660
-
19,816
94
19,910
(1)
Transfers between levels are deemed to have occurred at the beginning of the quarter in which the instruments were transferred. There were no significant transfers between level 1
and level 2.
(2)
The determination of an instrument’s level cannot be made at a global product level as a single product type can be in more than one level. For example, a single name corporate credit
default swap could be in level 2 or level 3 depending on whether the reference counterparty’s obligations are liquid or illiquid.
For further information on the level 3 movements and sensitivities, refer to Note 8 to the consolidated financial statements.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
109
10 Financial instruments - fair value of financial instruments not carried at fair value
The following table shows the carrying value and fair value of financial instruments carried at amortised cost on the balance sheet.
Items where
fair values
Fair value hierarchy level
approximate
Carrying value
Fair value
Level 2
Level 3
carrying value
2025
€m
€m
€m
€m
€m
Financial assets
Cash and balances at central banks
7,608
7,608
-
-
7,608
Loans to banks
865
832
376
266
190
Loans to customers
1,441
1,441
-
1,441
-
Debt securities
1,264
1,261
99
1,162
-
Other assets - settlement balances
277
277
-
-
277
Financial liabilities
Bank deposits
1,660
1,653
-
1,623
30
Customer deposits
5,010
5,009
-
5,009
-
Debt securities in issue
2,542
2,543
1,003
1,540
-
Other liabilities - settlement balances
257
257
-
-
257
Subordinated liabilities
169
171
171
-
-
2024
Financial assets
Cash and balances at central banks
6,187
6,187
-
-
6,187
Loans to banks
224
224
-
43
181
Loans to customers
956
938
-
938
-
Debt securities
1,515
1,514
98
1,416
-
Other assets - settlement balances
877
877
-
-
877
Financial liabilities
Bank deposits
1,607
1,607
-
1,576
31
Customer deposits
3,062
3,061
-
3,042
19
Debt securities in issue
2,528
2,528
1,592
936
-
Other liabilities - settlement balances
832
832
-
-
832
Subordinated liabilities
172
172
172
-
-
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
110
11 Financial instruments - maturity analysis
Remaining maturity
The following table shows the NWM N.V.'s residual maturity of financial instruments, based on contractual date of maturity.
2025
Repayable
on demand
0-1 months
1-3 months
3-6 months
6-12
months
1-2 years
2-5 years
Over 5
years
Maturity not
relevant
€m
€m
€m
€m
€m
€m
€m
€m
€m
Assets
Cash and balances at central banks
7,608
-
-
-
-
-
-
-
-
Short term government paper
-
100
299
-
-
-
-
-
-
Loans to banks
1,498
94
66
281
247
1,369
1,513
2
-
Loans to customers
1,328
1,730
21
-
334
64
928
161
-
Derivatives
-
1,171
1,147
517
628
450
858
4,020
-
Debt securities
-
74
112
89
25
38
75
1,142
-
Other assets
(1)
-
277
-
-
-
-
-
-
-
Liabilities
Bank deposits
1,538
1,344
205
522
1,396
1,628
723
-
-
Customer deposits
1,899
3,860
1,033
403
36
111
386
178
-
Derivatives
-
1,167
1,184
551
591
463
717
2,658
-
Debt securities in issue
-
70
186
878
893
515
46
420
-
Other liabilities
(2)
-
258
0
0
1
2
2
0
-
Subordinated liabilities
-
-
-
-
-
-
150
290
-
2024
Repayable
on demand
0-1 months
1-3 months
3-6 months
6-12 months
1-2 years
2-5 years
Over 5
years
Maturity not
relevant
€m
€m
€m
€m
€m
€m
€m
€m
€m
Assets
Cash and balances at central banks
6,187
-
-
-
-
-
-
-
-
Short term government paper
-
200
189
99
-
-
-
-
-
Loans to banks
1,291
2,305
993
1,475
-
-
-
2
-
Loans to customers
1,078
792
21
180
271
104
378
88
-
Derivatives
-
1,655
2,026
1,330
1,063
643
888
4,255
-
Debt securities
-
77
8
11
20
41
68
1,392
-
Other assets
(1)
-
877
-
-
-
-
-
-
-
Liabilities
Bank deposits
673
2,084
1,986
598
501
475
120
-
-
Customer deposits
2,302
2,753
712
683
45
21
365
101
-
Derivatives
-
1,608
2,047
1,375
1,058
742
802
2,878
-
Debt securities in issue
-
692
218
738
294
691
-
264
-
Other liabilities
(2)
-
833
-
1
1
2
4
-
-
Subordinated liabilities
-
-
-
-
-
150
-
303
-
(1)
Includes settlement balances of €277 million (2024 - €877 million).
(2)
Includes settlement balances of €257 million (2024 - €832 million) and lease liabilities of €6 million (2024 - €9 million).
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
111
11 Financial instruments - maturity analysis
continued
Assets and liabilities by contractual cash flow
maturity
The tables below show the contractual undiscounted cash flows
receivable and payable, up to a period of 20 years, including
future receipts and payments of interest of financial assets and
liabilities by contractual maturity. The balances in the following
tables do not agree directly with the consolidated balance sheet,
as the tables include all cash flows relating to principal and
future coupon payments, presented on an undiscounted basis.
The tables have been prepared on the following basis.
Financial assets have been reflected in the time band of the
latest date on which they could be repaid, unless earlier
repayment can be demanded by NWM N.V. Financial liabilities
are included at the earliest date on which the counterparty can
require repayment, regardless of whether or not such early
repayment results in a penalty. If repayment is triggered by, or is
subject to, specific criteria such as market price hurdles being
reached, the asset is included in the time band that contains the
latest date on which it can be repaid, regardless of early
repayment. The liability is included in the time band that contains
the earliest possible date on which the conditions could be
fulfilled, without considering the probability of the conditions
being met.
For example, if a structured note is automatically
prepaid when an equity index exceeds a certain level, the cash
outflow will be included in the less than three months’ period
whatever the level of the index at the year end.
The settlement date of debt securities in issue, issued by certain
securitisation vehicles consolidated by NWM N.V. depends on
when cash flows are received from the securitised assets. Where
these assets are prepayable, the timing of the cash outflow
relating to securities assumes that each asset will be prepaid at
the earliest possible date. As the repayments of assets and
liabilities are linked, the repayment of assets in securitisations is
shown on the earliest date that the asset can be prepaid, as this
is the basis used for liabilities.
The principal amounts of financial liabilities that are repayable
after 20 years or where the counterparty has no right to
repayment of the principal are excluded from tables along with
interest payments after 20 years.
The maturity of guarantees and commitments is based on the
earliest possible date they would be drawn in order to evaluate
NWM N.V.’s liquidity position.
MFVTPL assets of €16.1 billion (2024 - €19.7 billion) and HFT
liabilities of €15.3 billion (2024- €18.8 billion) have been excluded
from the following tables.
0-3 months
3-12
months
1-3 years
3-5 years
5-10 years
10-20 years
2025
€m
€m
€m
€m
€m
€m
Assets by contractual maturity
Cash and balances at central banks
7,608
-
-
-
-
-
Short term government papers
399
-
-
-
-
-
Loans to banks
490
178
198
-
-
-
Loans to customers
40
319
477
679
150
-
Debt securities
112
116
68
132
146
100
Other assets
277
-
-
-
-
-
8,926
613
743
811
296
100
2025
Liabilities by contractual maturity
Bank deposits
249
604
172
639
-
1
Customer deposits
4,571
441
310
258
106
148
Debt securities in issue
256
1,770
515
46
250
170
Other liabilities
258
2
3
1
-
-
Subordinated liabilities
2
5
12
156
-
271
5,336
2,822
1,012
1,100
356
590
Guarantees and commitments notional amount
(1)
Guarantees
(2)
527
-
-
-
-
-
Commitments
(3)
7,374
-
-
-
-
-
7,901
-
-
-
-
-
For notes to this table refer to the following page.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
112
11 Financial instruments - maturity analysis continued
0-3 months
3-12
months
1-3 years
3-5 years
5-10 years
10-20 years
2024
€m
€m
€m
€m
€m
€m
Assets by contractual maturity
Cash and balances at central banks
6,187
-
-
-
-
-
Short term government papers
389
99
-
-
-
-
Loans to banks
224
-
-
-
-
-
Loans to customers
61
477
216
215
72
-
Debt securities
11
34
66
59
290
452
Other assets
877
-
-
-
-
-
7,749
610
282
274
362
452
2024
Liabilities by contractual maturity
Bank deposits
515
647
404
45
-
-
Customer deposits
2,325
735
130
301
9
110
Debt securities in issue
881
1,073
691
-
104
150
Other liabilities
834
2
4
2
-
-
Subordinated liabilities
2
6
152
-
-
281
4,557
2,463
1,381
348
113
541
Guarantees and commitments notional amount
(1)
Guarantees
(2)
511
-
-
-
-
-
Commitments
(3)
6,892
-
-
-
-
-
7,403
-
-
-
-
-
(1)
Refer to Note 16 Contingent liabilities and commitments.
(2)
The NWM N.V. is only called upon to satisfy a guarantee when the guaranteed party fails to meet its obligations. The NWM N.V. expects most guarantees it provides to expire unused.
For further information, refer to Note 22 to the consolidated financial statements.
(3)
The NWM N.V. has given commitments to provide funds to customers under undrawn formal facilities, credit lines and other commitments to lend subject to certain conditions being met
by the counterparty. The NWM N.V. does not expect all facilities to be drawn, and some may lapse before drawdown.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
113
12 Loan impairment provisions
Off-balance sheet
Loans - amortised cost & FVOCI
Loan
Contingent
ECL provisions
Stage 1
Stage 2
Stage 3
Total
commitments
liabilities
Stage 1
Stage 2
Stage 3
Total
2025
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
Non-personal
1,896
121
-
2,017
7,620
527
8
4
-
12
Financial institutions
1,049
37
-
1,086
584
527
2
1
-
3
Corporate and other
847
84
-
931
7,036
-
6
3
-
9
Of which:
Telecom, Media & Technology
259
57
-
316
749
-
2
2
-
4
Natural Resources
156
-
-
156
12
-
-
-
-
-
Consumer Industires
115
2
-
117
395
-
-
-
-
-
Total
1,896
121
-
2,017
7,620
527
8
4
-
12
2024
Non-personal
955
118
34
1,107
6,958
512
5
2
1
8
Financial institutions
571
53
-
624
609
512
2
-
-
2
Corporate and other
384
65
34
483
6,349
-
3
2
1
6
Of which:
Telecom, Media & Technology
71
27
-
98
548
-
1
1
-
2
Natural Resources
-
-
-
-
-
-
-
-
-
-
Consumer Industires
30
1
-
31
420
-
-
-
-
-
Total
955
118
34
1,107
6,958
512
5
2
1
8
Credit risk impairments
- refer to Note 12 to the consolidated financial statements and the Risk and capital management - Credit risk
section for further details.
Non-traded market risk
- refer to the Risk and capital management - Non-traded market risk section for details on structural foreign
exchange exposure.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
114
13 Investments in subsidiaries
The parent company's subsidiary undertakings, participating interests and branches at 31 December 2025 are shown below:
Group interest 100%
Notes
Group interest <100%
Notes
Alcover A.G.
i, (1)
Eris Finance S.R.L
ii, (5)
Alternative Investment Fund B.V. in liquidation
i, (2)
Maja Finance S.R.L
iii, (5)
KEB Investors, L.P.
i, (3)
RBS Investments (Ireland) Ltd
i, (4)
RBS Nominees (Ireland) Ltd
i, (4)
Branches geographic location
France, Germany, Italy, Sweden
Key:
i
Group interest of 100%
ii
Group interest of 50%
iii
Economic interest of 97.87%; no equity ownership
Registered addresses
Country of incorporation
(1)
Tirolerweg 8, Zug, CH-6300
Switzerland
(2)
Claude Debussylaan 94, 1082 MD, Amsterdam
The Netherlands
(3)
Clarendon House, Two Church Street, Suite 104, Reid Street, Hamilton, HM 11
Bermuda
(4)
Ulster Bank Head Office, Bock B Central Park, Leopardstown, Dublin 18, D18 N153
Republic of Ireland
(5)
Via Vittorio Alfieri 1, Conegliano TV, IT-TN 31015
Italy
All subsidiaries and participating interests operate principally in their country of incorporation. The list of participating interests for
which statements of liability have been issued, has been filed with the Chamber of Commerce in Amsterdam. Some of NWM N.V.’s
subsidiaries and participating investments are regulated entities and therefore their ability to transfer funds to NWM N.V. is subject to
regulatory approvals.
Changes in investments in subsidiaries
Investments in subsidiaries are accounted for using the equity method. Movements during the year were as follows:
2025
2024
€m
€m
At 1 January
109
160
Income from subsidiaries
1
(4)
Capital repatriation/dividends received
(1)
(54)
(49)
Other changes
-
2
At 31 December
56
109
(1)
2025 includes dividends of €21 million from Alcover A.G, a share capital repayment from Alcover A.G. of €32 million, and a €1 million liquidation distribution from Alternative Investment
Fund B.V.
14 Other assets
2025
2024
€m
€m
Settlement balances
277
877
Prepaid expenses
1
1
Accrued income
3
3
Deferred tax
154
103
Other
31
19
466
1,003
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
115
15 Property, plant and equipment
2025
Right-of-use
Computer
equipment
Total
€m
€m
€m
Cost or valuation
At 1 January 2025
18
5
23
Additions
-
-
-
At 31 December 2025
18
5
23
Accumulated impairment, depreciation and amortisation
At 1 January 2024
11
4
15
Charge for the year
2
-
2
At 31 December 2025
13
4
17
Net book value at 31 December
5
1
6
Cost or valuation
At 1 January 2024
15
5
20
Additions
3
-
3
At 31 December 2024
18
5
23
Accumulated impairment, depreciation and amortisation
At 1 January 2024
8
4
12
Charge for the year
3
-
3
At 31 December 2024
11
4
15
Net book value at 31 December
7
1
8
16 Contingent liabilities and commitments and contractual obligations for future expenditure
not provided in the accounts
The amounts shown in the table below are intended only to provide an indication of the volume of business outstanding at 31
December 2025. Although the NWM N.V. is exposed to credit risk in the event of non-performance of the obligations undertaken by
customers, the amounts shown do not, and are not intended to, provide any indication of the NWM N.V.'s expectation of future losses.
In relation to contingent liabilities and commitments and contractual obligations for future expenditure, refer to Note 22 to the
consolidated financial statements for further details.
2025
2024
€m
€m
Contingent liabilities and commitments
Guarantees and assets pledged as collateral security
527
511
Standby facilities, credit lines and other commitments
7,618
6,959
Total
8,145
7,470
17 Subordinated liabilities
Refer to Note 16 to the consolidated financial statements for further details.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
116
18 Other liabilities and provisions
2025
2024
Other liabilities
€m
€m
Settlement balances
257
832
Accruals
23
24
Deferred Income
19
10
Other liabilities
47
50
Total
346
916
2025
2024
Provisions for liabilities and charges
€m
€m
Taxation
6
7
Other
11
5
17
12
Arising out of its normal business operations, the NWM N.V. is party to legal proceedings in the Netherlands, United Kingdom, the
United States of America and other jurisdictions. Litigation provisions at 31 December 2025 related to numerous proceedings; no
individual provision is material. Detailed descriptions of the NWM N.V.’s legal proceedings and discussion of the associated uncertainties
are given in Note 22 to the consolidated financial statements.
19 Asset transfers
Refer to Note 20 to the consolidated financial statements for further details.
20 Equity
Share capital
NWM N.V.’s share capital at 31 December 2025 consisted of 11,112 issued and fully paid ordinary shares of €4.50 each. Its authorised
share capital amounts to €225,000. It comprises 41,500 ordinary shares, each with a nominal value of €4.50 and 8,500 preference
shares, each with a nominal value of €4.50. All issued ordinary shares have been fully paid. There have been no changes in share
capital compared to 2024. Each ordinary share entitles the holder to cast one vote. Subject to certain exceptions provided for by law
or in the Articles of Association, resolutions are passed by an absolute majority of the votes cast. When shares are issued, each holder
of shares shall have pre-emptive right, in proportion to the aggregate amount of their shares, except in the case of an issue of shares
for a consideration other than in cash. In the event of the dissolution and liquidation of NWM N.V., the assets remaining after payment
of all debts will be distributed to the holders of ordinary shares on a pro-rata basis.
Share premium account
The share premium account amounts to €1,550 million (2024 - €1,550 million).
Revaluation reserves
Revaluation reserves include a cash flow hedge reserve of €9 million (2024 - €31 million). The cash flow hedge reserve comprises €16
million of positive fair value changes (2024 - €31 million) and €7 million of negative fair value changes (2024 - nil) relating to effective
hedging instruments, resulting in a net balance recognised in equity of €9 million (2024 - €31 million).
Legal reserves
Legal reserves comprise non-distributable profit participations of €40 million (2024 - €44 million), non-distributable reserve shares of
€10 million (2024 - €10 million) and a foreign exchange reserve of €2 million (2024 - €6 million).
Paid-in equity
Additional Tier 1 instruments issued by NWM N.V. having the legal form of debt are classified as equity under IFRS. The coupons on
these instruments are non-cumulative and payable at NWM N.V.’s discretion. In September 2024 NWM N.V. issued capital securities of
€250 million which qualify as Additional Tier 1 capital as described in CRD IV and CRR. These securities are perpetual. They can be
called on after five years and have a coupon of 3-month Euribor plus 4.05%, payable on a quarterly basis.
Ordinary dividends
NWM N.V. has not paid ordinary dividends in 2025. In 2024, NWM N.V. paid ordinary dividends in March 2024 and in October 2024 of
€3,779.70 per share and €2,699.78 per share respectively.
Capital
Capital requirements were met during 2025. Refer to the Risk and capital management section on pages 9 to 48.
Parent company financial statements and notes continued
NatWest Markets N.V.
Annual Report and Accounts 2025
117
21 Profit appropriation
Profit is appropriated in accordance with article 37 of the Articles of Association. The main stipulations with respect to shares currently
in issue are as follows:
The Managing Board may decide to make appropriations to reserves, subject to the approval of the Supervisory Board (article 37.2.a.).
The allocation of the amount remaining after these appropriations shall be determined by the General Meeting of Shareholders. The
Managing Board, subject to the approval of the Supervisory Board, shall make a proposal to that effect. A proposal to pay a dividend
shall be dealt with as a separate agenda item at the General Meeting of Shareholders (article 37.2.a.).
NWM N.V.’s policy on reserves and dividends shall be determined and can be amended by the Supervisory Board, upon the proposal
of the Managing Board. The adoption of and each subsequent amendment to the policy on reserves and dividends shall be discussed
and accounted for at the General Meeting of Shareholders under a separate agenda item (article 37.2.b.).
Subject to approval of the Supervisory Board, the Managing Board may make the dividend or interim dividend on the shares payable,
at the discretion of the holders, either in cash or, provided it is authorised to issue shares, partly or wholly in shares in the Company’s
capital or in a combination thereof, such combination to be determined by the Managing Board (article 37.3.).
Subject to the approval of the Supervisory Board, the Managing Board shall be authorised, in so far as such is permitted by the profit
as evidenced by an interim balance sheet drawn up with due observance of the provisions of Section 105, Subsection 4 of Book 2 of
the Netherlands Civil Code, to make payable an interim dividend on the shares once or more frequently in the course of any financial
year and prior to the approval of the Annual Accounts by the General Meeting of Shareholders (article 37.4.).
Subject to the approval of the Supervisory Board, the Managing Board may decide on a distribution charged against reserves in cash
or, if the Board is authorised to issue shares, in the form of shares (article 37.5).
Proposed profit appropriation
Appropriation of unappropriated profit pursuant to articles 37.2 and 37.3 of the Articles of Association:
2025
2024
€m
€m
Addition to reserves
-
105
Available for dividend distribution
117
-
117
105
In January 2026, the Managing Board, with the approval of the Supervisory Board, proposed to the General Meeting an ordinary
dividend of €117 million in respect of the unappropriated 2025 result. The dividend will be submitted for adoption at the forthcoming
General Meeting of Shareholders.
22 Incorporation and registration
NWM N.V. is a public limited liability company, incorporated under Dutch law on 30 May 1990, and registered at Claude Debussylaan
94, 1082 MD Amsterdam, Netherlands and is entered in the Trade Register of the Amsterdam Chamber of Commerce under no.
33002587.
23 Remuneration of the Managing Board and Supervisory Board
Refer to Note 26 to the consolidated financial statements for further details.
24 Related parties
NatWest Bank Europe GmbH transfers
In December 2024, it was announced that NWM N.V. would become NatWest Group’s primary European corporate and institutional
customer
facing entity. As part of this strategic transition, certain customer loans, contingent liabilities and commitments were
transferred during 2025 from NWBE, a fellow subsidiary of NatWest Group plc, to NWM N.V. These transfers were conducted on an
arm’s length basis and at carrying value, with no resulting gain or loss recognised. In addition, certain loans were subject to funded sub
participation arrangements with NatWest Bank Plc that transfer substantially all risks and rewards of ownership.
Refer to Note 27 to the consolidated financial statements for further details.
25 Post balance sheet events
Other than as disclosed in Note 28 to the consolidated financial statements, there have been no other significant events between 31
December 2025 and the date of approval of these accounts which would require a change to or additional disclosure.
The publication of these accounts was approved by the Supervisory Board on 17 February 2026. The financial statements will be
presented for adoption at the forthcoming General Meeting. With regard to the adoption of the financial statements of NWM N.V., the
Articles of Association state: ‘The resolution to adopt the financial statements will be passed by an absolute majority of votes passed
by an absolute majority of votes validly cast by the General Meeting of Shareholders.’
Amsterdam, 17 February 2026
Supervisory Board
Managing Board
Maarten Klessens
Vincent Goedegebuure
Annelies van der Pauw
Cornelis Visscher
Robert Begbie
Britta Achmann
Julio Alvaro
Mickey van Wieringen
Sylvie Billion
Carola von Schmettow
Other information
NatWest Markets N.V.
Annual Report and Accounts 2025
118
Articles of Association
The description set out below is a summary of the material
information relating to the Company’s share capital, including
summaries of certain provisions of the Articles of Association
and applicable Dutch law in effect at the relevant date. The
Articles of Association of NWM N.V. were last amended by a
notarial deed executed by Mr B.J. Kuck, civil law notary in
Amsterdam on 30 April 2018, under register entry number
33002587.
As stated in the Articles of Association the object of the
Company is:
•
The participation in, collaboration with and financing,
administration and management of other enterprises and
companies and the performance of all acts, activities and
services which are related or may be conducive thereto.
•
The engagement in banking and stockbroking activities, the
management of third-party assets, acting as trustee,
administrator, executor of wills and executive director, non-
executive director or liquidator of companies or other
organisations, the provision of insurances and the
performance of all other acts and activities which are related
or may be conducive thereto, all in the broadest possible
sense.
•
The fostering of the direct and indirect interests of all those
who are involved in any way in the Company and the
safeguarding of the continuity of the Company and its
affiliated enterprise(s).
Shares and voting rights
The company’s share capital at 31 December 2025 consisted of
11,112 issued and fully paid ordinary shares of €4.50 each. The
Company’s authorised share capital amounts to €225,000. It
comprises 41,500 ordinary shares, each with a nominal value of
€4.50 and 8,500 preference shares, each with a nominal value
of €4.50.
When shares are issued, each holder of shares shall have pre-
emptive right, in proportion to the aggregate amount of their
shares, except in the case of an issue of shares for a
consideration other than in cash or an issue of shares to
employees of the company or of a group company (art.9).
In the event of the dissolution and liquidation of the Company,
the assets remaining after payment of all debts will be
distributed to the shareholders of ordinary shares on a pro-rata
basis (art 39.3).
Relations with shareholders
Rights of shareholders
Any resolution to amend the Articles of Association or dissolve
NWM N.V. may only be passed by the General Meeting of
Shareholders following a proposal by the Managing Board which
has been approved by the Supervisory Board. A copy of the
proposal containing the literal text of the proposed amendments
shall be made available for inspection by the holders of shares of
NWM N.V. at the offices of NWM N.V. and at the offices stated in
the convocation to the meeting, from the day of convocation to
the end of the Meeting. Each Shareholder may obtain a full copy
of the proposal free of charge.
Meetings of shareholders and convocation
General meetings of shareholders shall be held in Amsterdam, or
in The Hague, Rotterdam, Utrecht or Haarlemmermeer
(Schiphol). The Annual General Meeting of Shareholders must be
held within six months of the end of each financial year. In
addition, General meetings of shareholders shall be held as
frequently as deemed necessary by the Managing Board or the
Supervisory Board and when required by law or by the Articles
of Association. General meetings of shareholders shall be
convened by the Managing Board or the Supervisory Board,
without prejudice to the provisions of Sections 110, 111 and 112
of Book 2 of the Netherlands Civil Code. Convocation shall take
place not later than on the fifteenth day prior to the day of the
meeting. Convocation shall state the items to be discussed or
alternatively notice shall be given that such items may be
inspected at the company’s offices.
Proposals to amend the Articles of Association or proposals
relating to a reduction of the company’s capital shall always be
included in the actual convocation.
Code of conduct
The code of conduct applies to everyone who works for the
NWM N.V. Group.
It promotes honest and ethical conduct, including the handling of
actual or apparent conflicts of interest between personal and
professional relationships. The NWM N.V. Group recognises that
personal conduct, business integrity and the NWM N.V. Group’s
security are crucial, and the code of conduct serves to inform
those who work for us of the NWM N.V. Group’s expectations of
their behaviour and practices.
The code of conduct is available on the NatWest Group’s
website,
natwestgroup.com,
and will be provided to any person
without charge, upon request, by contacting Company
Secretariat on the telephone number listed below.
Important addresses
Corporate Governance
Claude Debussylaan 94
1082 MD Amsterdam
The Netherlands
Telephone: + 31 20 464 26 99
Email: nvcorporategovernancesecretariat@natwestmarkets.com
Investor Relations
250 Bishopsgate
London EC2M 4AA
Telephone: +44 (0)207 672 1758
Email: investor.relations@natwest.com
Registered office
Claude Debussylaan 94
1082 MD Amsterdam
The Netherlands
Website
https://www.natwestmarkets.com/natwest-markets/about-
us/board-and-governance/natwest-markets-n-v-.html
Independent auditor’s report
NatWest Markets N.V.
Annual Report and Accounts 2025
119
To: the shareholder and Supervisory Board of NatWest Markets
N.V.
Report on the audit of the financial
statements 2025 included in the Annual
Report and Accounts
Our opinion
We have audited the accompanying financial statements for the
financial year ended 31 December 2025 of NatWest Markets
N.V. (NWM N.V., the Company or the group) based in
Amsterdam, the Netherlands. The financial statements comprise
the consolidated financial statements and the parent company
financial statements.
In our opinion:
•
The consolidated financial statements give a true and fair
view of the financial position of NWM N.V. as at 31
December 2025 and of its result and its cash flows for 2025
in accordance with International Financial Reporting
Standards as adopted in the European Union (EU-IFRSs) and
with Part 9 of Book 2 of the Dutch Civil Code
•
The parent company financial statements give a true and
fair view of the financial position of NWM N.V. as at 31
December 2025 and of its result for 2025 in accordance with
Part 9 of Book 2 of the Dutch Civil Code
The consolidated financial statements comprise:
•
The consolidated balance sheet as at 31 December 2025
•
The following statements for the year ended 31 December
2025: the consolidated income statement, the consolidated
statements of comprehensive income and changes in equity
and the consolidated cash flow statement
•
The notes comprising material accounting policy information
and other explanatory information
The parent company financial statements comprise:
•
The company balance sheet as at 31 December 2025
•
The company income statement for the year ended 31
December 2025
•
The notes comprising a summary of the accounting policies
and other explanatory information
Basis for our opinion
We conducted our audit in accordance with Dutch law, including
the Dutch Standards on Auditing. Our responsibilities under
those standards are further described in the Our responsibilities
for the audit of the financial statements section of our report.
We are independent of NWM N.V. in accordance with the EU
Regulation on specific requirements regarding statutory audit of
public-interest entities, the Wet toezicht accountantsorganisaties
(Wta, Audit firms supervision act), the Verordening inzake de
onafhankelijkheid van accountants bij assurance-opdrachten
(ViO, Code of Ethics for Professional Accountants, a regulation
with respect to independence) and other relevant independence
regulations in the Netherlands. Furthermore, we have complied
with the Verordening gedrags- en beroepsregels accountants
(VGBA, Dutch Code of Ethics for Professional Accountants).
We believe the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Information in support of our opinion
We designed our audit procedures in the context of our audit of
the financial statements as a whole and in forming our opinion
thereon. The following information in support of our opinion and
any findings were addressed in this context, and we do not
provide a separate opinion or conclusion on these matters.
Our understanding of the business
NWM N.V. is a licensed bank which operates as an investment
banking firm serving corporates and financial institutions in the
European Economic Area (‘EEA’). The group consist of multiple
branches and entities and is structured in components and we
tailored our group audit approach accordingly. We paid specific
attention in our audit to a number of areas driven by the
operations of the group and our risk assessment.
We determined materiality and identified and assessed the risks
of material misstatement of the financial statements, whether
due to fraud or error in order to design audit procedures
responsive to those risks and to obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
Materiality
Materiality
€21 million (2024: €20 million)
Benchmark applied
1% of total equity as at 31 December 2025 (2024: 1%)
Explanation
Based on our professional judgement, a benchmark of 1% of total equity is an appropriate
quantitative indicator of materiality and it reflects the focus of users of the financial
statements on the financial position of the Company. Equity is the basis for determining
regulatory capital and dividend payment capacity. We determined materiality consistent with
prior financial year.
We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the
financial statements for qualitative reasons.
We agreed with the Supervisory Board that misstatements in excess of €1 million, which are identified during the audit, would be
reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Independent auditor’s report continued
NatWest Markets N.V.
Annual Report and Accounts 2025
120
Scope of the group audit
NWM N.V. is at the head of a group of entities and is structured
in components. The financial information of this group is included
in the financial statements. The banking activities of NWM N.V.
are structured in geographical segments: the Netherlands and
the rest of the world. Further, NWM N.V. has one insurance
subsidiary in Switzerland that is in run-off.
We are responsible for planning and performing the group audit
to obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business units within the
group as a basis for forming an opinion on the financial
statements. We are also responsible for the direction,
supervision, review and evaluation of the audit work performed
for purposes of the group audit. We bear the full responsibility
for the auditor’s report.
Based on our understanding of the group and its environment,
the applicable financial framework and the group’s system of
internal control, we identified and assessed risks of material
misstatement of the financial statements and the significant
accounts and disclosures. Based on this risk assessment, we
determined the nature, timing and extent of audit work
performed, including the group components at which to perform
audit work. For this determination we considered the nature of
the relevant events and conditions underlying the identified risks
of material misstatements for the financial statements, the
association of these risks to components and the materiality or
financial size of the components relative to the group. We
communicated the audit work to be performed and identified
risks through instructions for component auditors as well as
requesting component auditors to communicate matters related
to the financial information of the component that is relevant to
identifying and assessing risks.
We have performed the audit procedures centrally for the
banking activities in the geographical segments mentioned
above. We have involved EY component auditors to perform
audit work for central operations focused on for example
commercial lending, credit, treasury, and financial control and
reporting functions. The EY component teams of the central
operations performed audit procedures under our coordination
and supervision.
This resulted in a coverage of 100% of the operating profit
before tax, 100% of total equity, 98.7% of total income and
99.7% of total assets. The percentages of coverage are
presented net of positive and negative contributions. For other
components, we performed analytical procedures to corroborate
that our risk assessment and scoping remained appropriate
throughout the audit.
We performed site visits to meet with EY component teams of
the central operations in the United Kingdom, observe the
component operations, discuss the group risk assessment and
the risks of material misstatements. We reviewed and evaluated
the adequacy of the deliverables from all component teams and
reviewed key working papers for selected components to
address the risks of material misstatement. We held planning
meetings, key meetings required based on circumstances and
closing meetings with all component teams. During these
meetings and calls, amongst others, the planning, procedures
performed based on risk assessments, findings and observations
were discussed and any further work deemed necessary by the
primary or component team was then performed.
By performing the audit work mentioned above at components
of the group, together with additional work at group level, we
have been able to obtain sufficient and appropriate audit
evidence about the group’s financial information to provide an
opinion on the financial statements.
Teaming and use of specialists
We ensured that the audit teams both at group and at
component levels included the appropriate skills and
competences which are needed for the audit of a listed client in
the banking industry. We included specialists in the areas of IT
audit, forensics, treasury, income tax and transfer pricing and
have made use of our own experts in the areas of financial
instrument valuation and modelling, macro-economic forecasting
and expected credit losses.
Our focus on climate-related risks and the energy
transition
Climate change and the energy transition are high on the public
agenda and lead to significant change for many businesses and
society. In the ”Sustainability reporting approach” section of the
annual report and accounts the Managing Board sets out how
the Company is reporting on climate-related and environmental
risks in the “Climate and Nature Risk”, “Financial Review”,
“Credit Risk”, and “Corporate Governance” sections of its
Annual Report and Accounts.
As part of our audit of the financial statements, we evaluated
the extent to which climate-related risks and the effects of the
energy transition are taken into account in estimates and
significant assumptions especially in the area of “Valuation of
financial instruments with higher risk characteristics”, “Valuation
of deferred tax assets” and “Expected credit losses” as disclosed
in Note “Accounting Policies - Basis of preparation - How
Climate risk affects our accounting judgments and estimates”, as
well as in the design of relevant internal control measures.
Furthermore, we read the other information included in the
annual report and accounts and considered whether there is
any material inconsistency between the non-financial
information.
We describe the audit procedures responsive to the impact of
climate change on the financial statements in the description of
our audit approach for the key audit matter “Valuation of
financial instruments with higher risk characteristics including
related income from trading activities”.
Our focus on fraud and non-compliance with laws and
regulations
Our responsibility
Although we are not responsible for preventing fraud or non-
compliance and we cannot be expected to detect non-
compliance with all laws and regulations, it is our responsibility to
obtain reasonable assurance that the financial statements, taken
as a whole, are free from material misstatement, whether
caused by fraud or error. The risk of not detecting a material
misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.
Independent auditor’s report continued
NatWest Markets N.V.
Annual Report and Accounts 2025
121
Our audit response related to fraud risks
We identified and assessed the risks of material misstatements
of the financial statements due to fraud. During our audit we
obtained an understanding of NMW N.V. and its environment
and the components of the system of internal control, including
the risk assessment process and the Managing Board’s process
for responding to the risks of fraud and monitoring the system of
internal control and how the Supervisory Board exercises
oversight, as well as the outcomes.
We refer to section “Risk factors” of the annual report and
accounts 2025 for the Managing Board’s
(fraud) risk assessment
We evaluated the design and relevant aspects of the system of
internal control and in particular the fraud risk assessment, as
well as the code of conduct, whistle blower procedures and
incident registration. We evaluated the design and the
implementation and, where considered appropriate, tested the
operating effectiveness, of internal controls designed to mitigate
fraud risks.
As part of our process of identifying fraud risks, we evaluated
fraud risk factors with respect to financial reporting fraud,
misappropriation of assets and bribery and corruption, in close
co-operation with our forensic specialists. We evaluated whether
these factors indicate that a risk of material misstatement due to
fraud is present.
We incorporated elements of unpredictability in our audit. We
also considered the outcome of our other audit procedures and
evaluated whether any findings were indicative of fraud or non-
compliance.
We addressed the risks related to management override of
controls, as this risk is present in all organizations. For these
risks we have, among other things, performed procedures to
evaluate whether the selection and application of accounting
policies by the Company, particularly those relating to subjective
measurements and complex transactions, as disclosed in Note
“Accounting policies – 3. Critical accounting policies” to the
financial statements. We have also used data analysis to identify
and address high-risk journal entries and evaluated the business
rationale (or the lack thereof) of significant extraordinary
transactions
,
including those with related parties.
As described in our key audit matter ”Valuation of financial
instruments with higher risk characteristics, including related
income from trading activities”, we considered the risks of
management bias that may represent a risk of material
misstatement due to fraud and the presumed risk of fraud in
revenue recognition in connection with valuation of financial
instruments with higher risk characteristics which requires
significant judgement. Further, we considered the risk of
management bias that may represent a risk of material
misstatement due to fraud in connection with the recognition of
deferred tax assets as described in our key audit matter
”Transfer pricing arrangements and recognition of deferred tax
assets”.
We considered available information and made enquiries of
relevant executives, directors, internal audit, legal, compliance,
human resources and business heads and the Supervisory
Board.
The fraud risks we identified, enquiries and other available
information did not lead to specific indications for fraud or
suspected fraud potentially materially impacting the view of the
financial statements.
Our audit response related to risks of non-compliance with
laws and regulations
We performed appropriate audit procedures regarding
compliance with the provisions of those laws and regulations
that have a direct effect on the determination of material
amounts and disclosures in the financial statements.
Furthermore, we assessed factors related to the risks of non-
compliance with laws and regulations that could reasonably be
expected to have a material effect on the financial statements
from our general industry experience, through discussions with
the Managing Board specifically about the procedures
management performs to be compliant with the banking
regulations, inspection of the systematic integrity risk analysis
(SIRA), reading minutes, inspection of internal audit and
compliance reports and performing substantive tests of details of
classes of transactions, account balances or disclosures.
We also inspected lawyers’ letters and correspondence with
regulatory authorities and remained alert to any indication of
(suspected) non-compliance throughout the audit. We assessed
whether NWM N.V. has an adequate process in place to
evaluate the impact of non-compliance for its activities and
financial reporting and, where relevant, whether NWM N.V.
implemented remediation plans as discussed in section “Risk and
Capital Management”. Finally, we obtained written
representations that all known instances of non-compliance with
laws and regulations have been disclosed to us.
Our audit response related to going concern
As disclosed in Note ”Basis of preparation” to the financial
statements, the financial statements have been prepared on a
going concern basis. When preparing the financial statements,
the Managing Board made a specific assessment of NWM N.V.’s
ability to continue as a going concern and to continue its
operations for the foreseeable future. We discussed and
evaluated the specific assessment with the Managing Board
exercising professional judgment and maintaining professional
skepticism.
We considered whether the Managing Board’s going concern
assessment, based on our knowledge and understanding
obtained through our audit of the financial statements or
otherwise, contains all relevant events or conditions that may
cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion.
Based on our procedures performed, we did not identify material
uncertainties about going concern or the Managing Board’s use
of the going concern basis of accounting. Our conclusions are
based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may
cause a company to cease to continue as a going concern.
Our key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements. We have communicated the key audit matters to
the Supervisory Board. The key audit matters are not a
comprehensive reflection of all matters discussed.
Independent auditor’s report continued
NatWest Markets N.V.
Annual Report and Accounts 2025
122
In comparison with previous year, the nature of our key audit matters did not change.
Transfer pricing arrangements and recognition of deferred tax assets
Given the high level of estimation uncertainty involved over the assumptions and judgments used for
forecasting future taxable income, including the allocation of transfer pricing income among NWM N.V.
branches, we identified a risk of material misstatement. We also identified the risks of management override of
controls with regard to the recognition of deferred tax assets.
Further, NWM Group plc, which includes NWM N.V. and its branches, applies a transfer pricing framework,
including a set of profit allocation models for its activities based on cost plus, return on equity and revenue split.
The transfer pricing arrangements related to intergroup transactions and services require the application of
judgment and require compliance with complex local tax regulations. NWM N.V. received transfer pricing
revenues of €156 million in 2025 (2024: €153 million). Given the judgment applied in the selection of the
transfer pricing models and assumptions used, we identified a risk of material misstatement relating to transfer
pricing revenues.
Reference is made to the ‘Accounting Policies’ to the consolidated financial statements, Note 2 ‘Non-interest
income’, Note 6 ‘Tax’ and Note 27 ‘Related parties’.
Our audit
approach
We have obtained an understanding of entity’s system of internal control, including control activities, evaluated
the design and implementation of internal controls across the processes relevant to transfer pricing
arrangements, recognition of deferred tax asset and assessment of its recoverability. This included, amongst
other, controls governing budget processes, transfer pricing model inputs, posting of journal entries and
disclosures.
We have tested how management has assessed the recognition of deferred tax assets and the data on which
these were measured. We have evaluated the appropriateness of the methods and the reasonableness of
assumptions used, mainly being the approved forecast of taxable income for future periods including transfer
pricing income and the assessment of future strategic plans. Further, we have evaluated the appropriateness
of extending the forecast period from five years to seven years with a focus on the increased uncertainty
associated with this longer time horizon. We obtained an understanding of back testing procedures performed
by NWM N.V. and tested the outcome of these procedures to evaluate the reliability of the forecast of the
taxable income. Furthermore, we have evaluated the outcome of alternative scenarios and sensitivity analyses
performed to assess whether the deferred tax asset recognized is within a reasonable range.
With the support of our internal transfer pricing and income tax specialists, we have assessed the
completeness, measurement and accuracy of transfer pricing income and related documentation. In order to
understand and evaluate management’s judgements, we have considered the status of current tax authority
enquiries and correspondences, current estimates and developments in the tax environment and challenged
management’s key assumptions.
We have evaluated whether NWM N.V. has appropriately applied the requirements of the IAS 1 ‘Presentation of
Financial Statements’, IAS 12 ‘Income Taxes’ and IFRIC 23 ‘Uncertain Tax Positions’ and whether the methods
for making estimates are appropriate and were applied consistently in connection with the recognition of
deferred tax assets and transfer pricing income.
Finally, we have evaluated the completeness and accuracy of the disclosures relating to the deferred tax assets
and transfer pricing arrangements in compliance with EU-IFRSs. This includes evaluation of particularly whether
disclosures adequately convey the degree of estimation uncertainty and adequately disclose the impact of
change in estimates in the current period.
Key
observations
We are satisfied that the models and assumptions used by management to determine transfer pricing income
and to recognise deferred tax assets are reasonable. The related disclosures in the financial statements are
considered adequate and appropriate in accordance with EU-IFRSs.
management’s confidence in NWM N.V.’s ability to generate sustainable taxable profits beyond the five
-
Risk.
As at 31 December 2025, NWM N.V. has approximately €2.5 billion in available tax credits and tax losses
carried forward. Based on its strategic plans, NWM N.V. expects to generate taxable income for future periods,
against which the tax losses and tax credits can be utilized, management has recorded a deferred tax assets
(‘DTA’) of €151 million as at 31 December 2025 (2024: €100 million). In 2025, for DTA recognition purposes,
the forecast period has been extended from five to seven years, as several factors have increased
year
budget horizon.
Independent auditor’s report continued
NatWest Markets N.V.
Annual Report and Accounts 2025
123
Valuation of financial instruments with higher risk characteristics including related income from trading activities
Risk
As at 31 December 2025 the Company held financial instruments with higher risk characteristics. These included
(but are not limited to) reported level 3 assets of €39 million (2024: €169 million) and level 3 liabilities of €88
million (2024: €94 million) whose value is dependent upon unobservable inputs. Refer to Note 8 ‘Financial
instruments – valuation’ to the financial statements.
The valuation of those financial instruments with higher risk characteristics can include both significant
judgement and the risk of inappropriate recognition of income from trading activities through incorrect pricing as
outlined below. The fair value of these instruments can involve complex valuation models and significant fair
value adjustments, both of which may be reliant on data inputs where there is limited market observability.
Management’s estimates which required significant judgement include:
•
Complex models – Complex model dependent valuations of financial instruments, the most significant being
interest rate swaps linked to pre-payment behaviour and interest rate options with exotic features;
•
Inputs used in valuation of illiquid instruments (“Illiquid Inputs”) - Pricing inputs and calibrations for illiquid
instruments. Additionally derivative instruments whose valuation is dependent on discount rates associated
with complex collateral arrangements; and
•
Fair value adjustments - The appropriateness of fair value adjustments made to derivative valuations
including Funding Valuation Adjustments (FVA) and Credit Valuation Adjustments (CVA) relating to
counterparties whose credit spread may not be observable, and material product and deal specific valuation
adjustments on long dated derivative portfolios.
Due to the identified risk of management override of controls, the presumed fraud risk of revenue recognition
and the significant judgement included, we identified the valuation of financial instruments with higher risk
characteristics, including related income from trading activities as key audit matter.
Our audit
approach
We evaluated the design and operating effectiveness of controls relating to financial instrument valuation
including independent price verification, valuation models governance, collateral management, income statement
analysis and the associated controls over relevant information technology systems. We also observed the
Valuation Committee meetings where valuation inputs, assumptions and adjustments were discussed and
approved.
We involved our financial instrument valuation and modelling specialists to assist us in performing procedures
including the following:
•
Complex models: Testing a sample of complex model-dependent valuations by performing independent
revaluation to assess the appropriateness of models and the adequacy of assumptions and inputs used by
NWM N.V.;
•
Illiquid inputs: Independently re-pricing a sample of financial instruments that had been valued using illiquid
pricing inputs, using alternative pricing sources where available, to evaluate management’s valuation; and
•
Fair value adjustments: Comparing fair value adjustment methodologies to current industry standards and
assessing the appropriateness and adequacy of the valuation adjustment framework in light of emerging
market practice and changes in the risk profile of the underlying portfolio; and revaluing a sample of
counterparty level
CVA, independently challenging illiquid CVA inputs.
Throughout our audit procedures we considered the current uncertain geopolitical and economic outlook,
including market volatility and the impact of climate change on the valuation of financial instruments. We
performed analysis focusing on long-dated illiquid positions to understand if there were indicators that pricing did
not appropriately capture climate related risks.
We assessed whether there were any indicators of aggregate bias in financial instrument marking and
methodology assumptions.
We performed back-testing analysis of recent trade activity and asset disposals to evaluate the drivers of
significant differences between book value and trade value to assess the impact on the fair value of similar
instruments within the portfolio. We performed an analysis of significant collateral discrepancies with
counterparties to assess the potential impact on the fair value of the underlying (and similar) financial
instruments.
Key
observations
We are satisfied that the models and assumptions used by management to reflect the fair value of financial
instruments with higher risk characteristics and the recognition of related income are reasonable and in
accordance with EU-IFRSs.
Independent auditor’s report continued
NatWest Markets N.V.
Annual Report and Accounts 2025
124
IT systems and controls impacting financial reporting
Risk
As discussed in the ‘Risk factors’ section under ‘Operational and IT resilience risk’, NWM N.V.’s IT environment
is complex and pervasive to the operations and financial reporting of NWM N.V. due to the large volume of
transactions processed in numerous locations daily, with extensive reliance on automated controls. The risk is
also impacted by the greater dependency on other NatWest Group entities and third-parties, increasing use of
cloud platforms, decommissioning of legacy systems and migration to new systems. Appropriate IT controls are
required to ensure that applications process data as expected and that changes are made in an appropriate
manner. Such controls contribute to mitigating the risk of potential fraud or errors as a result of changes to
applications and data.
NWM N.V has implemented user access management controls across IT applications, databases and operating
systems.
We have identified user access-related deficiencies and thus the risk of inappropriate access remains.
We therefore consider the IT systems and controls impacting the financial reporting a key audit matter.
Our audit
approach
We evaluated the design and operating effectiveness of IT general controls, including access over the
applications, operating systems and databases relevant to financial reporting. During our planning and test of
design phases of our audit, we performed procedures to assess the cybersecurity program and how
management evaluates cyber risks.
We tested user access by assessing the controls in place for in-scope applications, in particular testing the
addition and periodic recertification of users’ access.
We continue to focus on key controls enforced by NWM
N.V.’s user access management tools, including ensuring the completeness of user data, automated
identification of movers and leavers and the adequacy of the overall control environment in addressing access-
related IT risks to financial reporting. There have been no significant changes in the suite of access
management controls operated by NWM N.V. in the current year. Improvements have been made to further
standardise IT access management processes and controls, however privileged access control deficiencies
continue to be identified, including instances where the underlying systems are subject to change within the
year, including migrations., We tested compensating controls and performed additional substantive procedures
to address the residual risk.
We tested change management controls in relation to amendments to applications. We tested IT application
and controls over data interfaces between applications. For systems outsourced to third party service
providers, we tested IT general controls through evaluating the relevant Service Organisation Controls (‘SOC’)
reports (where available). This included assessing the timing of the reporting, the controls tested by the service
auditor and whether they addressed relevant IT risks. We also tested required complementary user entity
controls performed by management. Where a SOC report was not available we identified and reviewed
compensating business controls to address risks to financial reporting. Several systems have been migrated to
a cloud-hosted infrastructure model, however access management processes and controls remained in-house
and they formed part of our testing.
Where in-scope applications underwent transformations or data migrations during the current year, we tested
management’s controls on the transformations, including inspecting the project plans, the results of testing,
and the “go-live” approval process.
We assessed automated controls within business processes and the reliability of relevant reports used as part
of manual controls. This included assessing the integrity of system interfaces, the completeness and accuracy
of data feeds, automated calculations and specific input controls.
Where control deficiencies were identified, we tested remediation activities performed by management and/or
compensating controls in place and assessed the impact, of any residual risk over financial statement reporting.
This included aggregation analysis of the deficiencies identified to consider the pervasiveness of findings and the
impact on our overall approach to access management testing. Where the residual risk was not appropriately
addressed by compensating controls additional substantive testing was performed.
Key
observations
Our testing procedures (controls and substantive) enabled us to rely on the adequate and continued electronic
data processing relevant for our audit of the annual financial statements
Independent auditor’s report continued
NatWest Markets N.V.
Annual Report and Accounts 2025
125
Report on other information included in the Annual Report and Accounts
The annual report and accounts contain other information in addition to the financial statements and our auditor’s report thereon.
Based on the following procedures performed, we conclude that the other information:
•
Is consistent with the financial statements and does not contain material misstatements
•
Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the management report and the other
information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial
statements or otherwise, we have considered whether the other information contains material misstatements. By performing these
procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch
Standard 720. The scope of
the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.
The Managing Board is responsible for the preparation of the other information, including the management report in accordance with
Part 9 of Book 2 of the Dutch Civil Code and other information required by Part
9 of Book 2 of the Dutch Civil Code.
Description of responsibilities regarding the financial statements
Responsibilities of the Managing Board and the Supervisory Board for the financial statements
The Managing Board is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRSs
and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Managing Board is responsible for such internal control as the
Managing Board determines is necessary to enable the preparation of the financial statements that are free from material
misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, the Managing Board is responsible for assessing the Company’s ability to
continue as a going concern. Based on the financial reporting framework mentioned, the Managing Board should prepare the financial
statements using the going concern basis of accounting unless the Managing Board either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so. The Managing Board should disclose events and circumstances that may
cast significant doubt on the Company’s ability to continue as a going concern in the financial statements.
The Supervisory Board is responsible for overseeing the Company’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit
evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material
misstatements, whether due to fraud or error during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the
nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch
Standards on Auditing, ethical requirements and independence requirements. The Information in support of our opinion section above
includes an informative summary of our responsibilities and the work performed as the basis for our opinion.
Our audit further included among others:
•
Performing audit procedures responsive to the risks identified, and obtaining audit evidence that is sufficient and appropriate to
provide a basis for our opinion
•
Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
•
Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Managing Board
•
Evaluating the overall presentation, structure and content of the financial statements, including the disclosures
•
Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
Independent auditor’s report continued
NatWest Markets N.V.
Annual Report and Accounts 2025
126
Communication
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant findings in internal control that we identify during our audit.
In this respect we also submit an additional report to the Audit Committee of the Supervisory Board in accordance with Article
11 of
the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this
additional report is consistent with our audit opinion in this auditor’s report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that were of most
significance in the audit of the financial statements. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public
interest.
Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the Supervisory Board as auditor of NWM N.V. on 22 July 2016, as of the audit for the year 2016 and have
operated as statutory auditor ever since that date.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements
regarding statutory audit of public-interest entities.
European Single Electronic Reporting Format (ESEF)
NWM N.V. has prepared the annual report and accounts in ESEF. The requirements for this are set out in the Delegated Regulation
(EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter:
the RTS on ESEF).
In our opinion the annual report and accounts prepared in the XHTML format, including the marked-up consolidated financial
statements as included in the reporting package by NWM N.V., complies in all material respects with the RTS on ESEF.
The Managing Board is responsible for preparing the annual report and accounts, including the financial statements, in accordance
with the RTS on ESEF, whereby the Managing Board combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report and accounts in this reporting package
comply with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including Dutch Standard 3950N, ”Assurance-opdrachten inzake het
voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument” (assurance engagements relating to compliance
with criteria for digital reporting). Our examination included amongst others:
•
Obtaining an understanding of the Company’s financial reporting process, including the preparation of the reporting package
•
Identifying and assessing the risks that the annual report and accounts do not comply in all material respects with the RTS on
ESEF and designing and performing further assurance procedures responsive to those risks to provide a basis for our opinion,
including:
o
Obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline
XBRL instance document and the XBRL extension taxonomy files, has been prepared in accordance with the technical
specifications as included in the RTS on ESEF
o
Examining the information related to the consolidated financial statements in the reporting package to determine whether all
required mark-ups have been applied and whether these are in accordance with the RTS on ESEF.
Amsterdam, 17 February 2026
EY Accountants B.V.
J.G. Kolsters
Risk factors
NatWest Markets N.V.
Annual Report and Accounts 2025
127
Principal Risks and Uncertainties
Set out below are certain risk factors that could have a material
adverse effect on NWM N.V. Group’s future results, its financial
condition and/or prospects and cause them to be materially
different from what is forecast or expected, and directly or
indirectly impact the value of its securities. These risk factors
are broadly categorised and should be read in conjunction with
other risk factors in this section and other parts of this annual
report, including the top and emerging risk section, and the risk
and capital management section. They should not be regarded
as a complete and comprehensive statement of all potential
risks and uncertainties facing NWM N.V. Group.
Economic and political risk
NWM N.V. Group, its customers and its counterparties face
continued economic and political risks and uncertainties in
the UK, European and global markets, including as a result
of fluctuations in economic growth, markets, inflation,
interest rates, asset prices, protectionist policies, and
geopolitical developments.
NWM N.V. Group is affected by global economic and market
conditions, particularly those in the EU. Uncertain and volatile
economic conditions in the EU or globally can create a
challenging operating environment for financial services
companies such as NWM N.V. Group. The outlook for the EU
and the global economy is affected by many factors including:
GDP growth, unemployment, inflation, interest rates, asset
prices (including residential and commercial property),
commodity and energy prices, supply chain disruption (including
the sourcing of rare earths and critical minerals), protectionist
policies or trade barriers (including tariffs), and monetary and
fiscal policy.
Economic and market conditions could be exacerbated by a
number of factors including: instability in the UK, the EU or
global financial systems, market volatility and change,
fluctuations in the value of the pound sterling and euro, new or
extended economic sanctions, volatility in commodity prices,
political uncertainty or instability, concerns regarding sovereign
debt (including sovereign credit ratings), any lack or perceived
lack of creditworthiness of a counterparty or borrower that may
trigger market-wide liquidity problems, changing demographics
in the markets that NWM N.V. Group and its customers serve,
or rapid changes to the economic environment due to the
adoption of technology, digitisation, automation and artificial
intelligence (including machine learning, and generative and
agentic artificial intelligence), or due to climate change,
biodiversity loss, environmental degradation, and widening social
and economic inequalities.
NWM N.V. Group is also exposed to risks arising out of
geopolitical events or political developments that may hinder
economic or financial activity levels, and may directly or
indirectly impact European, regional or global trade and/or NWM
N.V. Group’s customers and counterparties. Political, military or
diplomatic events, geopolitical tensions, armed conflict (for
example, the Russia-Ukraine conflict and Middle East conflicts),
terrorist acts or threats (including to critical infrastructures),
more severe and frequent extreme weather events, widespread
public health crises, and the responses to any of the above
scenarios by various governments and markets, may have a
material adverse effect on the business and performance of
NWM N.V. Group.
The value of NWM N.V. Group’s own and other securities may
be materially affected by market risk (including as a result of
market fluctuations). Market volatility, illiquid market conditions
and disruptions in the financial markets may make it very
difficult to value certain of NWM N.V. Group’s own and other
securities, particularly during periods of market displacement.
This could cause a decline in the value of NWM N.V. Group’s
financial instruments, or inaccurate carrying values for certain
securities. Similarly, NWM N.V. Group trades a considerable
amount of own and other securities (including derivatives) and
volatile market conditions could result in a significant decline in
NWM N.V. Group’s net trading income or result in a trading loss.
In addition, financial markets are susceptible to severe events
evidenced by, or resulting in, rapid depreciation in asset values,
which may be accompanied by a reduction in asset liquidity.
Under these conditions, hedging and other risk management
strategies may not be as effective at mitigating losses as they
would be under more normal market conditions. Moreover,
under these conditions, market participants are particularly
exposed to trading strategies employed by many market
participants simultaneously (and often automatically) and on a
large scale, increasing NWM N.V. Group’s counterparty risk.
NWM N.V. Group’s risk management and monitoring processes
seek to quantify and mitigate NWM N.V. Group’s exposure to
extreme market moves. However, market events have
historically been difficult to predict and NWM N.V. Group, its
customers and its counterparties could realise significant losses
if severe market events were to occur.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
Changes in interest rates will continue to affect NWM N.V.
Group’s business and results.
NWM N.V. Group’s performance is affected by changes in
interest rates. Benchmark overnight interest rates decreased in
2025, and forward rates at 31 December 2025 suggest that the
key ECB interest rates will remain stable in 2026. On the one
hand, stable interest rates support more predictable income
flow and less volatility in asset and liability valuations, although
persistently low and negative interest rates, may adversely
affect NWM N.V. Group, as it limits the income from lending
activities. On the other hand, volatility in interest rates may
result in unexpected outcomes both for interest income and
asset and liability valuations which may adversely affect NWM
N.V. Group. For example, decreases in key benchmark rates
such as the key ECB interest rates may adversely affect NWM
N.V. Group’s net interest margin, and unexpected movements in
spreads between key benchmark rates such as sovereign and
swap rates may, in turn, affect liquidity portfolio valuations. In
addition, unexpected sharp rises in rates may also have an
adverse effect on some asset and derivative valuations.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
128
Furthermore, customer and investor responses to rapid changes
in interest rates can have an adverse impact on NWM N.V.
Group. For example, customers may make deposit choices that
provide them with higher returns than those then being offered
by NWM N.V. Group, and NWM N.V. Group may not respond
with competitive products as rapidly, for example following an
interest rate change which may in turn decrease NWM N.V.
Group’s net interest income. Movements in interest rates also
influence and reflect the macroeconomic situation more broadly.
Affecting factors such as business and consumer confidence,
property prices, default rates on loans, customer behaviour and
other indicators may have an indirect adverse effect on NWM
N.V. Group and the effectiveness of its hedging strategy.
Any of the above may have an adverse effect on its future
results, financial condition, prospects, and/or reputation.
Business change and execution risk
NWM N.V. is NatWest Group’s operating entity located in
the EU to serve European customers and is directly
supervised by the ECB.
NWM N.V. is NatWest Group’s banking and trading entity
headquartered in the Netherlands with branches in France,
Germany, Italy, and Sweden to serve EEA customers. Certain
aspects of the services provided by NatWest Group in the EU
require local licences or individual equivalence decisions
(temporary or otherwise) by relevant regulators. However,
following the approval of CRR III and CRD VI, non-EU firms
providing ‘banking services’ will be required from 11 January
2027 to apply for and obtain authorisation to operate as third
country branches in each relevant EU member state where they
provide such services, unless an exemption applies. A failure to
obtain the appropriate authorisations may have an adverse
effect on NWM Group (including N.V. Group).
As NWM N.V and its parent company, RBS Holdings N.V., are
classified as a “significant supervised group”, NWM N.V is
directly supervised by the ECB, which may have an adverse
effect on NWM N.V. Group’s business strategy, operating model
(including any compliance cost) and prudential and regulatory
requirements.
NatWest Group continues to evaluate its EU operating model,
making adaptations as necessary. For instance, in December
2024, NWM N.V. became the primary corporate and institutional
customer-facing entity of the NatWest Group in Europe. This
new structure may lead to a significant increase in assets and
liabilities within NWM N.V. Group and may require NWM N.V. to
significantly increase its funding requirements, add additional
skilled personnel, allocate increased management attention, and
grow its technological capabilities. A failure by NWM N.V. Group
to address any of these changes, if and when they arise, may
have an adverse impact on NWM N.V. Group. See, ‘NWM N.V.
Group may be adversely affected if it is unable to access the
capital markets to meet its funding requirements’, ‘NWM N.V.
Group relies on attracting, retaining, developing and
remunerating diverse senior management and skilled personnel,
and is required to maintain good employee relations’, and ‘NWM
N.V. Group’s operations are highly dependent on its complex IT
systems, and any IT failure could adversely affect NWM N.V.
Group’.
Changes to, or uncertainty regarding NatWest Group’s and
NWM Group’s (including NWM N.V. Group) EU operating model
have been, and may continue to be, costly and may (i) adversely
affect customers and counterparties who are dependent on
trading with the EU or personnel from the EU; and/or (ii) result
in further costs and/or regulatory sanction due to a failure to
receive the required regulatory permissions and/or further
changes to NatWest Group’s and NWM Group’s business
operations, product offering, customer engagement, and
regulatory requirements (including as a result of CRD VI).
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation
.
NWM Group (including NWM N.V. Group) has been in a
period of, and may continue to be subject to, significant
structural and other change.
As part of NatWest Group’s strategy (including the strategic
priorities of disciplined growth, leveraging simplification and
active balance sheet and risk management), NWM Group and
NWM N.V. Group’s strategies have evolved to mostly focus on
serving NatWest Group’s corporate and institutional customer
base via the creation of NatWest Group’s C&I business segment,
which was established to promote closer operational and
strategic alignment to support NatWest Group growth and offer
more integrated services to customers across NatWest Group
entities. As a result, NWM N.V. Group results are reported on a
standalone legal entity basis, and under the C&I operating
segment structure.
NWM N.V. Group’s ability to serve its customers may be
potentially impacted by the execution of NatWest Group’s
strategy in respect of its C&I business segment and customer
responses to the changes in NWM Group’s (including NWM N.V.
Group’s) business model and may be more adverse than
expected. Previously anticipated revenue and profitability levels
may not be realised (including in relation to: the ability to
support customer transactions whilst meeting NWM Group
capital targets, and changes to the availability of risk capital, in
the timescales envisaged, or at all). A challenging
macroeconomic environment, political and regulatory
uncertainty, market volatility, market competition, the
emergence of digital assets and digital currencies operating
alongside the traditional monetary system, and/or the
complexity of deployment and integration of artificial intelligence
in NWM N.V. Group’s processes, controls, and products may
require NWM N.V. Group to make adjustment to its strategy or
planned implementation timeline.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
129
As a subsidiary of NWM Plc (and ultimately NatWest Group plc),
NWM N.V. Group utilises a number of NWM Group and NatWest
Group systems, policies and frameworks (via a shared services
model) including in relation to: technology (including innovation)
and network infrastructure, marketing, risk frameworks,
financial accounting systems, reporting, onboarding processes,
model development and validation, certain administrative and
legal services and governance. Any change to the cost and/or
scope of services provided by NatWest Group may impact NWM
Group’s (including NWM N.V. Group’s) competitive position and
its ability to meet its other targets. In addition, the products that
NWM N.V. Group offers are based on those offered by NWM
Group. As such, any changes made to systems, policies,
frameworks or products of NatWest Group or NWM Group, or
any failure of NWM Group to receive these services may have a
corresponding impact on NWM N.V, and may increase NWM
N.V. Group operational risk. See, ‘Operational risks (including
reliance on third-party suppliers and outsourcing of certain
activities) are inherent in NWM N.V. Group’s businesses’.
NWM Group’s (which includes NWM N.V. Group) strategy
requires it to focus on bank-wide simplification, a proportion of
which is dependent on simplification of its IT systems and
therefore may not be realised if IT capabilities are not delivered
in line with assumptions. The scale of changes that have been
concurrently implemented require the implementation and
application of robust governance and controls frameworks and
robust IT systems. There is a risk that NWM Group (including
NWM N.V. Group) may not be successful in maintaining such
governance and control frameworks and IT systems.
As part of NWM Group’s strategy, NWM Group has set a
number of financial, capital and operational targets and
expectations. The financial, operational and capital targets and
expectations envisaged by NWM’s strategy may not be met or
maintained in the timeframes expected or at all. In addition,
targets and expectations for NWM Group are based on
management plans, projections and models, and are subject to
a number of key assumptions and judgements, any of which
may prove not to materialise.
NWM N.V Group’s strategy entails legal, execution, operational
and regulatory, conflicts, IT system, cybersecurity, culture,
people, conduct, business and financial risks to NWM N.V.
Group. As a result, NWM N.V. Group may not be able to
successfully implement some or all aspects of its strategy or
may not meet any or all of the related strategic targets or
expectations. Each of these risks, and others identified in this
section entitled ‘Principal Risks and Uncertainties’, individually or
collectively, could adversely affect NWM N.V. Group’s products
and services offering or office locations, competitive position,
ability to meet targets and commitments, reputation with
customers or business model and may result in higher-than-
expected costs. There is a risk that the intended benefits of
NatWest Group’s and NWM Group’s (which includes NWM N.V.
Group) strategies may not be realised in the timelines or in the
manner contemplated, or at all. Various aspects of NWM
Group’s strategy may not be successful, may not be completed
as planned, or at all, or could be phased or could progress in a
manner other than as expected. This could lead to additional
management actions by NWM N.V. Group, regulatory action or
reduced liquidity and/or funding opportunities.
Any of the above may lead to NWM Group (and NWM N.V.
Group) not being viable, competitive or profitable, and may have
a material adverse effect on NWM N.V. Group’s future results,
financial condition, prospects, and/or reputation.
NWM N.V. Group operates in markets that are highly
competitive, with competitive pressures and technology
disruption.
NWM N.V. Group operates in markets for which competition is
expected to continue and intensify due to: evolving customer
behaviour, technological changes (including digital currencies,
stablecoins, and the growth of digital banking), competitor
behaviour, new market entrants, competitive foreign exchange
offerings, industry trends resulting in increased disaggregation
or unbundling of financial services, or, conversely the re-
intermediation of traditional banking services, and the impact of
regulatory actions, among others. In particular, NWM N.V.
Group may be unable to grow or retain market share due to
new (or more competitive) banking, lending, and payment
offerings by rapidly evolving incumbents and challengers
(including shadow banks, alternative or direct lenders and new
entrants). These competitive pressures may result in a shift in
customer behaviour and impact NWM N.V. Group’s revenues
and profitability. Moreover, innovations in biometrics, artificial
intelligence, automation, cloud services, blockchain,
cryptocurrencies and quantum computing may rapidly facilitate
industry transformation.
Increasingly, many of NWM N.V. Group’s products and services
are, and will become, more technology intensive, including
through digitalisation, automation and the use of artificial
intelligence, while needing to continue complying with applicable
and evolving regulations. NWM N.V. Group’s ability to develop or
acquire digital solutions and their integration into NWM N.V.
Group’s structures, systems and controls has become
increasingly important for retaining and growing NWM N.V.
Group’s market share and customer-facing businesses. NWM
N.V. Group’s innovation strategy (which includes investments in
its IT capability intended to improve its core infrastructure and
customer interface capabilities as well as investments and
strategic partnerships with third-party technology providers)
may not be successful or may not result in NWM N.V. Group
offering innovative products and services in the future.
Furthermore, competitors may outperform NWM N.V. Group in
deploying technologies to deliver products or services to
customers, which may adversely affect NWM N.V. Group’s
competitive position. In addition, continued industry consolidation
and/or technological developments could result in the
emergence of new competitors or strengthening NWM N.V.
Group’s current competitors, including in their ability to offer a
broader and more attractive or better value range of products
and services and geographic diversity. For example, new
market entrants, including non-traditional financial services
providers, such as technology conglomerates, may benefit from
scale, technology and may be able to develop and deliver
financial services at a lower cost base.
Failure to offer competitive, attractive, innovative, and profitable
products that are also released in a timely manner, may result
in lost market share, losses on some or all of NWM N.V. Group’s
initiatives and missed growth opportunities. For example, NWM
N.V. Group is investing in the automation of certain solutions
and interactions within its customer-facing businesses, including
through artificial intelligence. There can be no certainty that
such initiatives will allow NWM N.V. Group to compete effectively
or will deliver the expected cost savings for NWM N.V. Group. In
addition, the implementation of NatWest Group’s strategy,
delivery on its climate ambition and cost-controlling measures
may also have an adverse effect on competitiveness and
returns.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
130
NWM Group and NWM N.V. Group may also fail to identify
opportunities or derive benefits from technological innovation,
shifting customer behaviour or regulatory changes. Competitors
may better attract and retain customers and key employees,
operate more effective IT systems, and have access to lower
cost funding and/or be able to attract deposits or provide
investment-banking services on more favourable terms than
NWM N.V. Group. Although NWM Group invests in new
technologies and participates in industry and research-led
technology development initiatives, such investments may be
insufficient or ineffective, especially given NWM Group’s focus on
business simplification and cost efficiencies. This could affect
NWM N.V. Group’s ability to offer innovative products or
technologies to customers.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
The transfer of NatWest Group’s EU corporate portfolio
involves certain risks.
To improve efficiencies and best serve customers, certain
assets, liabilities, transactions and activities of NatWest Group
(including its Western European corporate portfolio principally
consisting of term funding and revolving credit facilities) (the
‘Transfer Business’), have been or may be: (i) transferred from
the ring-fenced subgroup of NatWest Group to NWM Group
(including NWM N.V. Group), and/or (ii) transferred to the ring-
fenced subgroup of NatWest Group from NWM Group (including
NWM N.V. Group), subject to customer and regulatory
requirements, such as CRD VI. The timing, success and
quantum of any of these transfers remain uncertain as is the
impact of these transactions on NWM N.V. Group’s results of
operations and financial condition.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
Financial resilience risk
NWM Group, including NWM N.V. Group, may not achieve its
ambitions or targets, meet its guidance, generate returns or
implement its strategy effectively.
NWM N.V. Group’s ability to meet its ambitions, targets,
guidance, and make discretionary capital distributions is subject
to various internal and external factors, risks and uncertainties.
These include but are not limited to: EU and global
macroeconomic, political, market and regulatory uncertainties,
customer behaviour, operational risks and risks relating to NWM
N.V. Group’s business model and strategy (including risks
associated with climate and other sustainability-related issues).
See also, ‘NWM Group (including NWM N.V. Group) has been in
a period of, and may continue to be subject to, significant
structural and other change’.
As part of NatWest Group’s strategy, NWM N.V. Group has set
a number of financial, capital and operational targets including in
respect of: CET1 ratio targets, leverage ratio targets, targets in
relation to local regulation, funding plans and requirements,
employee engagement, diversity and inclusion as well as it
contributes to NatWest Group’s climate and sustainability-
related ambitions, targets and commitment and the
implementation of NatWest Group’s climate transition plan. A
number of factors may impact NWM N.V.’s abilities to maintain
its CET1 ratio target, including the macroeconomic
environment, impairments, the extent of organic capital
generation, and the receipt and payment of dividends.
Furthermore, the focus on maintaining a disciplined cost base
may result in limited investment in other areas which could
affect NWM N.V. Group’s long-term product offering or
competitive position and its ability to meet its other targets,
including those related to customer satisfaction.
NWM N.V. Group is also subject to transfer pricing
arrangements with NWM Plc (NWM N.V.’s parent company).
These are governed by arm’s length transfer pricing legislation
in both the Netherlands and UK, require the approval by both
counterparties and are subject to audit and/or assessment by
Dutch and UK tax authorities. A portion of NWM N.V. Group’s
income derives from transfer pricing income received from
NatWest Group entities. Should the level of such income change
as a result of regulatory intervention or otherwise, this may
have a material and adverse effect on NWM N.V. Group’s
profitability, and its ability to meet its financial targets
Any of the above may lead to NWM N.V. Group not being a
viable, competitive or profitable banking business, and may have
a material adverse effect on NWM N.V. Group’s future results,
financial condition, prospects, and/or reputation.
NWM N.V. may not meet the prudential regulatory
requirements for capital.
NWM N.V. Group is required by the ECB to maintain adequate
financial resources. Adequate capital provides NWM N.V. Group
with financial flexibility in the face of turbulence and uncertainty
in the global economy and specifically in its core European
operations. NWM Plc’s and NWM N.V.’s target CET1 ratios (see
the targets set forth in each respective entity’s Outlook section)
are based on regulatory requirements and management actions
that rely on internal modelling and risk appetite (including under
stress). As at 31 December 2025, NWM N.V. Group’s CET1 ratio
(on a consolidated basis) was 18.5% and its CET1 ratio target
for the medium term is around 14 %. NWM N.V.’s current capital
strategy is based on the management of RWAs and other
capital management initiatives.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
131
Other factors that could influence NWM N.V.’s CET1 ratios
include:
•
a depletion of NWM N.V.’s capital resources through
reduced profits (which would in turn impact retained
earnings) and may result from revenue attrition or increased
liabilities, sustained periods of low interest rates, reduced
asset values resulting in write-downs or reserve
adjustments, impairments, changes in accounting policy,
accounting charges or foreign exchange movements;
•
a change in the quantum of NWM N.V.’s RWAs, stemming
from exceeding target RWA levels, regulatory changes
(including their interpretation or application), foreign
exchange movements or a failure in internal controls or
procedures to accurately measure and report
RWAs/leverage exposure. An increase in RWAs would lead
to a reduction in the CET1 ratio (and increase the amount of
internal MREL required for NWM N.V.);
•
changes in prudential regulatory requirements including the
Total Capital Requirement for NWM N.V. (as regulated by
the ECB), including Pillar 2 requirements and regulatory
buffers as well as any applicable scalars;
•
further losses (including as a result of extreme one-off
incidents such as cyberattack, fraud or conduct issues)
would deplete capital resources and place downward
pressure on the CET1 ratio; or
•
the timing of planned liquidation, disposal and/or capital
releases of capital including on activity or legacy entities
owned by NWM Plc and NWM N.V. See also, ‘NWM Group
(including NWM N.V. Group) has been in a period of, and
may continue to be subject to, significant structural and
other change’.
Management actions taken under a stress scenario may affect,
among other things, NWM N.V. Group’s product offering, its
credit ratings, its ability to operate its businesses and pursue its
strategy, any of which may negatively impact investor
confidence and the value of NWM N.V. Group’s securities. See
also, ‘NWM N.V. may not manage its capital, liquidity or funding
effectively which could trigger the execution of certain
management actions or recovery options’, and ‘NatWest Group
(including NWM N.V.) may become subject to the application of
statutory stabilisation or resolution powers which may result in,
for example, the write-down or conversion of certain Eligible
Liabilities (including NWM N.V.’s Eligible Liabilities).’
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. Group may not meet the prudential regulatory
requirements for liquidity and funding or may not be able to
adequately access sources of liquidity and funding, which
could trigger the execution of certain management actions
or recovery options.
Liquidity and the ability to raise funds continues to be a key area
of focus for NWM N.V. Group and the industry as a whole.
NatWest Group and NWM N.V are required by regulators in the
UK, the EU and other jurisdictions in which they undertake
regulated activities to maintain adequate liquidity and funding
resources. To satisfy its liquidity and funding requirements, NWM
N.V. Group may therefore access sources of liquidity and
funding through deposits and wholesale funding, including debt
capital markets and trading liabilities such as repurchase
agreements. As at 31 December 2025, NWM N.V. Group held
€5.9 billion in deposits from banks and customers.
The level of deposits and wholesale funding may fluctuate due to
factors outside NWM N.V. Group’s control. These factors
include: loss of customers, changes in customer behaviour, loss
of customer and/or investor confidence (including in individual
NWM N.V. Group entities or the European banking sector or the
banking sector as a whole), macroeconomic developments,
political uncertainty, changes in interest rates, market volatility,
increasing competitive pressures for bank funding (including
from new entrants, fintech companies, or new deposit offerings
(such as digital assets), or the reduction or cessation of deposits
and other funding by counterparties, any of which could lead to
a significant outflow of deposits or reduction in wholesale
funding within a short period of time, higher funding costs and
failure to comply with regulatory capital, funding and leverage
requirements. As a result, NWM N.V. Group and its subsidiaries
could be required to change their funding plans and/or their
operations, which could, in turn, exacerbate NWM N.V Group’s
funding and liquidity risk. An inability to grow, roll-over, or any
material decrease in, NWM N.V. Group’s deposits, short-term
wholesale funding and short-term liability financing could,
particularly if accompanied by one of the other factors
described above, have an adverse effect on NWM N.V. Group’s
ability to satisfy its liquidity needs.
NWM N.V. Group engages from time to time in ‘fee based
borrow’ transactions whereby collateral (such as government
bonds) is borrowed from counterparties on an unsecured basis
in return for a fee. This borrowed collateral may be used by
NWM N.V. Group to finance parts of its balance sheet, either in
its repo financing business, derivatives portfolio or more
generally across its balance sheet. If such ‘fee based borrow’
transactions are unwound whilst used to support the financing
of parts of NWM N.V. Group balance sheet, then unsecured
funding from other sources would be required to replace such
financing. There is a risk that NWM N.V. Group would be unable
to replace such financing on acceptable terms or at all, which
may have an adverse effect on its liquidity position and may
adversely affect NWM N.V. Group. In addition, because ‘fee base
borrow’ transactions are conducted off-balance sheet (due to
the collateral being borrowed) investors may find it more difficult
to gauge NWM N.V. Group’s creditworthiness, which may be
affected if these transactions were to be unwound in a stress
scenario. Any lack of, or perceived lack of, creditworthiness may
adversely affect NWM N.V. Group.
As at 31 December 2025, NWM N.V. Group reported a liquidity
coverage ratio of 181% on a consolidated basis. If its liquidity
position were to come under stress and if NWM N.V. Group is
unable to raise funds through deposits, wholesale funding
sources, or other reliable funding sources, on acceptable terms
or at all, its liquidity position would likely be adversely affected.
This would mean that NWM N.V. Group might be unable to:
meet deposit withdrawals on demand or at their contractual
maturity, repay borrowings as they mature, meet its obligations
under committed financing facilities, comply with regulatory
funding requirements, undertake certain capital and/or debt
management activities, or fund new loans, investments and
businesses.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
132
If, under a stress scenario, the level of liquidity falls outside of
NWM N.V. Group’s risk appetite, there are a range of recovery
management actions that NWM N.V. Group could take to
manage its liquidity levels, but any such actions may not be
sufficient to restore adequate liquidity levels. NWM N.V. Group
must maintain a recovery plan acceptable to its regulator, such
that a breach of NWM N.V. Group’s applicable liquidity
requirements would trigger consideration of NWM N.V.’s
recovery actions. This in turn may prompt consideration of
NatWest Group’s recovery plan to attempt to remediate a
deficient liquidity position. NWM N.V. Group may need to
liquidate assets to meet its liabilities, including disposals of assets
not previously identified for disposal to reduce its funding or
payment commitments or trigger the execution of certain
management actions or recovery options. This could also lead to
higher funding costs and/or changes to NWM N.V. Group’s
funding plans or its operations. In a time of reduced liquidity or
market stress, NWM N.V. Group may be unable to sell some of
its assets or may need to sell assets at depressed prices, which
in either case may adversely affect NWM N.V. Group.
NWM N.V. Group independently manages liquidity risk on a
standalone basis, including through holding its own liquidity
portfolio. It has restricted access to liquidity or funding from
other NatWest Group entities. As a result, NWM N.V.’s liquidity
position could be adversely affected, which may also require
assets to be liquidated or may result in higher funding costs
which may adversely affect NWM N.V. Group’s margins and
profitability. NWM N.V.’s management of its own liquidity
portfolio and the structure of capital support are subject to
operational and execution risk, as NWM N.V. is required to meet
its own liquidity and capital requirements.
Continuing market volatility may have a negative effect on NWM
N.V. Group’s access to liquidity and funding, which could mean
that NWM N.V. Group is required to adapt its funding plan or
change its operations in order to satisfy its liquidity and funding
requirements, which could have an adverse effect on NWM N.V.
Group. Market volatility may also result in increases to leverage
exposure.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. Group may be adversely affected if it is unable to
access the capital markets to meet its funding requirements.
NWM N.V.‘s funding requirements are based on its current and
anticipated business activities, and may increase in the future
(including as a result of changes to NatWest Group’s and NWM
Group’s (including NWM N.V. Group) EU operating model).
Therefore, NWM N.V. Group is reliant on frequent access to the
capital markets for funding, at a cost that can be passed
through to its customers.
This access entails execution risk, regulatory risk, risk of
reduced commercial activity, risk of loss of market confidence in
NWM N.V. Group if it cannot finance its activities and risk of a
ratings downgrade, which could be influenced by a number of
internal or external factors, including, those summarised in
‘NWM N.V. Group, its customers and its counterparties face
continued economic and political risks and uncertainties in the
UK, European and global markets, including as a result of
fluctuations in economic growth, markets, inflation, interest
rates, asset prices, protectionist policies, and geopolitical
developments’ and ‘NWM N.V. Group’s businesses are subject
to substantial regulation and oversight, which are constantly
evolving and may adversely affect NWM N.V. Group.’
In addition, NWM N.V. receives capital ultimately from NWM
Group plc and NWM N.V. is therefore reliant on the willingness
of NWM Group plc to fund its internal capital targets. NWM N.V.
Group has set target levels for different tiers of capital as
percentages of its RWAs. The level of capital required for NWM
N.V. to meet its internal targets is therefore a function of the
level of RWAs and its leverage exposure in NWM N.V. and this
may vary over time.
Any inability of NWM N.V. Group to adequately access the
capital markets, to manage its balance sheet in line with
assumptions in its capital and funding plans, may adversely
affect NWM N.V. Group, such that NWM N.V. Group may not
constitute a viable banking business and/or NWM N.V. may fail
to meet its regulatory capital and funding requirements (at
present, NWM N.V. does not yet have its own MREL).
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. may not manage its capital, liquidity or funding
effectively which could trigger the execution of certain
management actions or recovery options.
Under the EU Bank Recovery and Resolution Directives I and II
(‘BRRD’), as implemented in the Netherlands, NWM N.V. Group
must maintain a recovery plan acceptable to its regulator, such
that a breach of NWM N.V.’s applicable capital or leverage,
liquidity or funding requirements would trigger consideration of
NWM N.V.’s recovery action, and in turn may prompt
consideration of NatWest Group’s recovery actions. If, under
stressed conditions, the liquidity, capital or leverage ratio were
to decline, there are a range of recovery management actions
(focused on risk reduction and mitigation) that NWM N.V. could
undertake that may or may not be sufficient to restore
adequate liquidity, capital and leverage ratios. Additional
management options relating to existing capital issuances, asset
or business disposals, capital payments and dividends from
NWM Plc to its parent, could also be undertaken to support
NWM N.V.’s capital and leverage requirements.
NatWest Group may also address a shortage of capital in NWM
N.V. by providing parental support to NWM N.V., subject to
evidence that the conditions set out in Article 23 of the BRRD,
as implemented into Dutch law article 3:301 and 3:305 of the
Dutch Financial Markets Supervision Act (‘FMSA’) have been
met. NatWest Group’s and/or NWM N.V.’s regulator may also
request that NWM N.V. Group carry out additional capital
management actions. The Bank of England (‘BoE’) has identified
single point-of-entry at NatWest Group plc, as the preferred
resolution strategy for NatWest Group.
However, under certain conditions set forth in the BRRD, as
implemented by the FMSA, De Nederlandsche Bank (‘DNB’) or
the Single EU Resolution Board (‘SRB’), also have the power to
execute the ‘bail-in’ of certain securities of NWM N.V. without
further action at NatWest Group level.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
133
Any capital management actions taken under a stress scenario
may, in turn affect: NWM N.V. Group’s product offering, credit
ratings, ability to operate its businesses and pursue its strategy
as well as negatively impacting investor confidence and the
value of NWM N.V. Group’s securities. See also, ‘NatWest Group
(including NWM N.V.) may become subject to the application of
statutory stabilisation or resolution powers which may result in,
for example, the write-down or conversion of certain Eligible
Liabilities (including NWM N.V.’s Eligible Liabilities)’. In addition, if
NWM N.V.’s liquidity position was to be adversely affected, this
may require assets to be liquidated or may result in higher
funding costs, which may adversely affect NWM N.V. Group’s
operating performance.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
Any reduction in the credit rating and/or outlooks assigned
to NatWest Group plc, any of its subsidiaries (including NWM
Plc or NWM N.V.) or any of their respective debt securities
could adversely affect the availability of funding for NWM
N.V. Group, reduce NWM N.V. Group’s liquidity and funding
position and increase the cost of funding.
Rating agencies regularly review NatWest Group plc, NWM Plc,
NWM N.V. and other NatWest Group entities’ credit ratings and
outlooks. NWM N.V. Group entities’ credit ratings and outlooks,
could be negatively affected (directly and indirectly) by a
number of factors that can change over time, including without
limitation: credit rating agencies’ assessment of NWM N.V.
Group’s strategy and management’s capability; its financial
condition including in respect of profitability, asset quality,
capital, funding and liquidity, and risk management practices;
the level of political support for the sectors and regions in which
NWM N.V. Group operates; the legal and regulatory frameworks
applicable to NWM N.V. Group’s legal structure; business
activities and the rights of its creditors; changes in rating
methodologies; changes in the relative size of the loss-absorbing
buffers protecting bondholders and depositors; the competitive
environment, political, geopolitical and economic conditions in
NWM N.V. Group’s key markets (including fluctuations in
economic growth, markets, inflation, interest rates, asset prices,
protectionist policies, and geopolitical developments); any
reduction of the UK’s sovereign credit rating and market
uncertainty. In addition, credit rating agencies take into
consideration sustainability-related factors, including climate,
environmental, social and governance related risk, as part of the
credit rating analysis, as are investors in their investment
decisions.
Any reductions in the credit rating of NatWest Group plc, NWM
Plc, NWM N.V. or of certain other NatWest Group entities could
significantly affect NWM N.V. Group. Adverse consequences for
NWM N.V. Group from downgrades could include, without
limitation, a reduction in the access to capital markets or in the
size of NWM N.V.’s deposit base, and trigger additional collateral
or other requirements in its funding arrangements or the need
to amend such arrangements, which could adversely affect
NWM Group‘s liquidity and funding position and cost of funding,
which could in turn limit the range of counterparties willing to
enter into transactions with NWM N.V. Group on favourable
terms, or at all. This may in turn adversely affect NWM N.V.
Group’s competitive position and threaten its prospects.
Any of the above may have a material adverse effect on NWM
Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. Group has significant exposure to counterparty
and borrower risk including credit losses, which may have an
adverse effect on NWM N.V. Group.
NWM N.V., a subsidiary of NWM Plc, has a portfolio of loans and
loan commitments to Western European corporate customers.
As a result, NWM N.V. Group has exposure to many different
sectors, customers and counterparties with a range of various
credit quality. Risks arising from actual or perceived changes in
credit quality and the recoverability of monies due from
borrowers and other counterparties are inherent in a wide
range of NWM N.V. Group’s businesses. These risks may be
concentrated for those businesses for which customer income is
heavily weighted towards a specific geographic region, industry
or customer base. Furthermore, these risks are likely to increase
due to the expected transfer of NatWest Group’s Transfer
Business. See ‘The transfer of NatWest Group’s EU corporate
portfolio involves certain risks’.
Credit risk may arise from a variety of business activities,
including, but not limited to: extending credit to customers
through various lending commitments; entering into swap or
other derivative contracts under which counterparties have
obligations to make payments to NWM N.V. Group (including
uncollateralised derivatives); providing short or long-term
funding that is secured by physical or financial collateral whose
value may at times be insufficient to fully cover the loan
repayment amount; posting margin and/or collateral and other
commitments to clearing houses, clearing agencies, exchanges,
banks, securities firms and other financial counterparties; and
investing and trading in securities and loan pools, whereby the
value of these assets may fluctuate based on realised or
expected defaults on the underlying obligations or loans. See
also, ‘Risk and Capital Management — Credit Risk’. Any
negative developments in the activities listed above may
negatively impact NWM N.V. Group’s customers and credit
exposures, which may, in turn, adversely affect NWM N.V.
Group’s profitability. The credit quality of NWM N.V. Group’s
borrowers and other counterparties may be affected by global
macroeconomic and political uncertainties, as well as prevailing
economic and market conditions. See ‘NWM N.V. Group, its
customers and its counterparties face continued economic and
political risks and uncertainties in the UK, European and global
markets, including as a result of fluctuations in economic
growth, markets, inflation, interest rates, asset prices,
protectionist policies, and geopolitical developments’. Any
further deterioration in these conditions or changes to legal or
regulatory landscapes could worsen borrower and counterparty
credit quality or impact the enforcement of contractual rights,
increasing credit risk.
Further, the value or effectiveness of any credit protection that
NWM N.V. Group has acquired through credit default swaps
depends on the value of the underlying assets and the financial
condition of the counterparties, and prevailing market spread.
Changes in credit spreads, deterioration in counterparty
creditworthiness, the outcome of determination committees, or
disputes over contractual terms may result in valuation
adjustments, impairments or increased collateral requirements,
creating potential liquidity pressures on NWM N.V. Group.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
134
NWM N.V. Group is exposed to the financial sector, including
sovereign debt securities, financial institutions, financial
intermediation providers (including providing facilities to financial
sponsors and funds, backed by assets or investor commitments)
and securitised products (typically senior lending to special
purpose vehicles backed by pools of segregated financial
assets). Concerns about, or a default by, a financial institution or
intermediary could lead to significant liquidity problems and
losses or defaults by other financial institutions or intermediaries,
since the commercial and financial soundness of many financial
institutions and intermediaries is closely related and
interdependent as a result of credit, trading, clearing and other
relationships. Any perceived lack of creditworthiness of a
counterparty or borrower may lead to market-wide liquidity
problems and losses for NWM N.V. Group.
In addition, the value of collateral may be correlated with the
probability of default by the relevant counterparty (‘wrong way
risk’), which would increase NWM N.V. Group’s potential loss.
This systemic risk may also adversely affect financial
intermediaries, such as clearing agencies, clearing houses,
banks, securities firms and exchanges with which NWM N.V.
Group interacts on a regular basis. See also, ‘NWM N.V. Group
may be adversely affected if it is unable to access the capital
markets to meet its funding requirements’, and ‘NWM N.V.
Group may not meet the prudential regulatory requirements for
liquidity and funding or may not be able to adequately access
sources of liquidity and funding, which could trigger the
execution of certain management actions or recovery options’.
As a result, adverse changes in borrower and counterparty
credit risk may cause additional impairment charges under IFRS
9, increased repurchase demands, higher costs, additional
write-downs and losses for NWM N.V. Group and an inability to
engage in routine funding transactions. NWM N.V. Group has
applied an internal analysis of multiple economic scenarios
(MES) together with the determination of specific overlay
adjustments to inform its IFRS 9 ECL (Expected Credit Loss).
See ‘Risk and Capital Management – Credit Risk’. The
assumptions and judgements used in the MES and ECL
assessment at 31 December 2025 may not prove to be
adequate resulting in incremental ECL provisions for NWM N.V.
Group.
Due to NWM N.V. Group’s exposure to the financial industry, it
also has exposure to shadow banking entities (i.e., entities which
carry out activities of a similar nature to banks without the same
regulatory oversight). NWM N.V. Group is required to identify
and monitor its exposure to shadow banking entities, implement
and maintain an internal framework for the identification,
management, control and mitigation of the risks associated with
exposure to shadow banking entities, and/or ensure effective
reporting and governance in respect of such exposure. If NWM
N.V. Group is unable to properly identify and monitor its shadow
banking exposure, maintain an adequate framework, or ensure
effective reporting and governance in respect of shadow
banking exposure.
Any of the above may adversely affect NWM N.V. Group’s
future results, financial condition, prospects, and/or reputation.
NWM N.V. Group could incur losses or be required to
maintain higher levels of capital as a result of limitations or
failure of various models.
Given the complexity of NWM N.V. Group’s business, strategy
and capital requirements, NWM N.V. Group relies on models for
a wide range of purposes, including to manage its business,
assess the value of its assets and its risk exposure, as well as to
anticipate capital and funding requirements (including to
facilitate NatWest Group’s mandated stress testing).
In addition, NWM N.V. Group utilises models for valuations,
credit approvals, calculation of loan impairment charges on an
IFRS 9 basis, financial reporting and for financial crime (criminal
activities in the form of money laundering, terrorist financing,
bribery and corruption, tax evasion and sanctions as well as
external or internal fraud (collectively, ‘financial crime’)). NWM
N.V. Group’s models, and the parameters and assumptions on
which they are based, are periodically reviewed.
Model outputs are inherently uncertain, because they are
imperfect representations of real-world phenomena, are
simplifications of complex real-world systems and processes,
and are based on a limited set of observations. NatWest Group
(which includes NWM N.V. Group) also continues to invest in
building new capabilities that employ new artificial intelligence
technologies, such as generative artificial intelligence, and it
expects its use of these technologies to increase over time.
However, there are significant risks involved in utilising more
sophisticated modelling approaches, including artificial
intelligence, and no assurance can be provided that NWM N.V.
Group’s use of artificial intelligence in its models will enhance its
business or produce only intended or beneficial results. NWM
N.V. Group may face adverse consequences as a result of
actions or decisions based on models that are poorly developed,
incorrectly implemented, non-compliant, outdated or used
inappropriately. This includes models that are based on
inaccurate or non-representative data (for example, where
there have been changes in the micro or macroeconomic
environment in which NWM N.V. Group operates) or as a result
of the modelled outcome being misunderstood, or used for
purposes for which it was not designed. This could result in
findings of deficiencies by NatWest Group’s (and in particular,
NWM Group’s or NWM N.V. Group’s) regulators (including as
part of NatWest Group’s mandated stress testing), increased
capital requirements, rendering some business lines
uneconomical, requiring management action or subjecting NWM
N.V. Group to regulatory sanction, any of which in turn may also
have an adverse effect on NWM N.V. Group and its customers.
Any of the above may have a material adverse effect on NWM
Group’s future results, financial condition, prospects, and/or
reputation.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
135
NWM N.V. Group’s financial statements are sensitive to
underlying accounting policies, judgements, estimates and
assumptions.
The preparation of financial statements requires management to
make judgements, estimates and assumptions that affect the
reported amounts of assets, liabilities, income, expenses,
exposures and RWAs. While estimates, judgements and
assumptions take into account historical experience and other
factors (including market practice and expectations of future
events that are believed to be reasonable under the
circumstances), actual results may differ due to the inherent
uncertainty in making estimates, judgements and assumptions
(particularly those involving the use of complex models).
Furthermore, accounting policy and financial statement
reporting requirements increasingly require management to
adjust existing judgements, estimates and assumptions for the
effects of climate-related, sustainability and other matters that
are inherently uncertain and for which there is little historical
experience which may affect the comparability of NWM N.V.
Group’s future financial results with its historical results. Actual
results may differ due to the inherent uncertainty in making
climate-related and sustainability estimates, judgements and
assumptions. See ‘There are significant limitations related to
accessing accurate, reliable, verifiable, auditable, consistent and
comparable climate and sustainability-related data that
contribute to substantial uncertainties in accurately assessing,
managing and reporting on climate and sustainability-related
information and risks, as well as making informed decisions.’
Accounting policies deemed critical to NWM N.V. Group’s results
and financial position, based upon materiality and significant
judgements and estimates, involve a high degree of uncertainty
and may have a material impact on its results. For 2025, these
include fair value and deferred tax. These are set out in the
section ‘Critical accounting policies’.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
Changes in accounting standards may materially impact
NWM N.V. Group’s financial results.
NWM N.V. Group prepares its consolidated financial statements
in accordance with IFRS as adopted by the European Union.
Changes in accounting standards or guidance by accounting
bodies and/or changes in accounting standards requirements by
regulatory bodies or in the timing of their implementation,
whether immediate or foreseeable, could result in NWM N.V.
Group having to recognise additional liabilities on its balance
sheet, or in further write-downs or impairments to its assets,
which may have an adverse effect on its results. Additionally,
auditors may have different interpretations of these accounting
standards, and any change of auditor may lead to unfavourable
changes in NWM N.V. Group’s accounting policies.
NWM N.V. Group’s trading assets amounted to €6.5 billion as at
31 December 2025. The valuation of financial instruments,
including derivatives, measured at fair value can be subjective,
in particular where models are used which include unobservable
inputs. Generally, to establish the fair value of these instruments,
NWM N.V. Group relies on quoted market prices or, where the
market for a financial instrument is not sufficiently credible,
internal valuation models that utilise observable market data. In
certain circumstances, the data for individual financial
instruments or classes of financial instruments utilised by such
valuation models may not be available or may become
unavailable due to prevailing market conditions. In these
circumstances, NWM N.V. Group’s internal valuation models
require NWM N.V. Group to make assumptions, judgements and
estimates to establish fair value, which are complex and often
relate to matters that are inherently uncertain. Any of these
factors could require NWM N.V. Group to recognise fair value
losses which may adversely affect NWM N.V. Group’s income
generation and financial position.
From time to time, the International Accounting Standards
Board may issue new accounting standards or interpretations
that could materially impact how NWM N.V. Group calculates,
reports and discloses its financial results and financial condition,
and which may affect NWM N.V. Group capital ratios, including
the CET1 ratio and the required levels of regulatory capital.
New accounting standards and interpretations that have been
issued by the International Accounting Standards Board but
which have not yet been adopted by NWM N.V. Group are
discussed in ‘
Future accounting developments
’.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. Group could be adversely affected if NWM N.V.
Group or NatWest Group fail to meet the requirements of
regulatory stress tests, or if NatWest Group’s resolution
preparations are deemed inadequate.
NWM N.V. Group is subject to stress testing by the ECB, as is
NatWest Group, its ultimate parent company, by its regulators in
the UK. Stress tests are designed to assess the resilience of
banks to potential adverse economic or financial developments
and ensure that they have robust, forward-looking capital
planning processes that account for the risks associated with
their business profile. If the stress tests reveal that a bank’s
existing regulatory capital buffers are not sufficient to absorb
the impact of the stress, then it is possible that NWM N.V.
Group, NatWest Group and/or NWM Group may need to take
action to strengthen their capital positions.
Failure by NWM N.V. Group (or NatWest Group) to meet its
quantitative and qualitative requirements of the stress tests set
forth by the ECB or UK regulators, as applicable, may result in:
NWM N.V. Group and/or NatWest Group’s regulators requiring
NWM N.V. Group (or NatWest Group) to generate additional
capital, reputational damage, increased supervision and/or
regulatory sanctions and/or loss of investor confidence.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
136
NatWest Group is subject to regulatory oversight by the BoE
and the PRA, and is required (under the PRA Rulebook) to carry
out an assessment of its preparations for resolution, submit a
report of the assessment to the PRA, and disclose a summary of
this report. In August 2024 the BoE’s assessment of NatWest
Group’s preparations did not identify any areas for further
enhancement, shortcomings, deficiencies or substantive
impediments. If any future BoE assessments identify any such
areas in NatWest Group’s ability to achieve the resolvability
outcomes, or reveals that NatWest Group is not adequately
prepared to be resolved, or does not have adequate plans in
place to meet resolvability requirements, NatWest Group may
be required to take action to enhance its preparations to be
resolvable, resulting in additional cost and the dedication of
additional resources. These actions may have an impact on
NWM N.V. Group, as depending on the BoE’s assessment,
potential NWG Group’s required actions may include, but are
not limited to, restrictions on maximum individual and aggregate
exposures, a requirement to dispose of specified assets, a
requirement to change legal or operational structure, a
requirement to cease carrying out certain activities and/or to
maintain a specified amount of MREL. This may also impact
NatWest Group’s and NWM N.V. Group’s strategic plans and
may lead to a loss of investor confidence. Additionally, DNB and
the SRB may exercise similar powers if the recovery and
resolution plans of NWM N.V. Group are not satisfactory.
Any of the above have a material adverse effect on NWM N.V.
Group’s future results, financial condition, prospects, and/or
reputation.
NatWest Group (including NWM N.V.) may become subject
to the application of statutory stabilisation or resolution
powers which may result in, for example, the write-down or
conversion of certain Eligible Liabilities (including NWM N.V.’s
Eligible Liabilities).
The BRRD establishes a common approach within the EU for
the recovery and resolution of banks. In the UK and the
Netherlands, the BRRD has been implemented via national
legislation which grants powers to a national resolution authority
(the ‘NRA’). The UK implementation of the BRRD remains in
force now that the transition following the UK’s withdrawal from
the EU has ended.
In the EU the BRRD is also (partly) implemented by a directly
binding regulation which established a Single Resolution
Mechanism (‘SRM’) and the SRB with powers which exceed the
powers of the EU NRAs.
The Netherlands – NWM N.V.
The BRRD and the SRM provide the SRB and DNB (the ‘N.V.
Authorities’) with substantial powers to resolve and stabilise
financial institutions incorporated in the Netherlands. The N.V.
Authorities are responsible for resolution in relation to RBS
Holdings N.V. and its subsidiaries (including NWM N.V.). As a
result, the SRB assumes direct resolution responsibility for NWM
N.V. Group, while DNB participates in the planning and
execution of resolution measures in coordination with the SRB
within the SRM framework. The N.V. Authorities have broad
powers to implement resolution measures with respect to
financial institutions incorporated in the Netherlands which meet
the conditions for resolution, which may include (without
limitation) measures analogous to the Resolution Stabilisation
Tools (options set out at points (i) to (iv) below under the UK
Banking Act 2009 (the ‘Act’). These powers and tools are
designed to be used prior to the point at which any insolvency
proceedings with respect to NWM N.V. could have been
initiated.
In addition to the resolution powers of the N.V. Authorities
described above, the Dutch Minister of Finance may, with
immediate effect, take measures or expropriate assets and
liabilities of, claims against or securities issued by or with the
consent of NWM N.V., if in the Minister of Finance’s opinion, the
stability of the financial systems is in serious and immediate
danger as a result of the situation in which the firm finds itself
(the ‘Minister of Finance Powers‘). There remains uncertainty
regarding the ultimate nature and scope of these powers, and
any exercise of the resolution regime powers by the N.V.
Authorities or the Minister of Finance Powers may adversely
affect holders of NWM N.V.’s Eligible Liabilities that fall within the
scope of such powers.
United Kingdom – NatWest Group plc and its UK
subsidiaries
The BoE, the Prudential Regulation Authority (‘PRA’), the
Financial Conduct Authority (‘FCA’), and HM Treasury (the ‘UK
Authorities’, and together, with the N.V. Authorities, the
‘Authorities’) are granted substantial powers to resolve and
stabilise UK-incorporated financial institutions. Five stabilisation
options exist: (i) transfer of all of the business of a relevant entity
or the shares of the relevant entity to a private sector
purchaser; (ii) transfer of all or part of the business of the
relevant entity to a ‘bridge bank’ wholly or partially-owned by
the BoE; (iii) transfer of part of the assets, rights or liabilities of
the relevant entity to one or more asset management vehicles
for management of the transferor’s assets, rights or liabilities;
(iv) the write-down, conversion, transfer, modification, or
suspension of the relevant entity’s equity, capital instruments
and liabilities; and (v) temporary public ownership of the relevant
entity. These options may be applied to NatWest Group plc as
the parent company or to NWM Group, as a subsidiary, where
certain conditions are met (such as, whether the firm is failing or
likely to fail, or whether it is reasonably likely that action will be
taken (outside of resolution) that will result in the firm no longer
failing or being likely to fail). Moreover, there are modified
insolvency and administration procedures for relevant entities
within NatWest Group, and the Authorities have the power to
modify or override certain contractual arrangements in certain
circumstances and amend the law for the purpose of enabling
their powers to be used effectively and may promulgate
provisions with retrospective applicability.
Similar powers may also be exercised with respect to NWM N.V.
in the Netherlands by the relevant Dutch regulatory authorities.
Under the Act, the UK Authorities are generally required to have
regard to specified objectives in exercising the powers provided
for by the Act. One of the objectives (which is required to be
balanced as appropriate with the other specified objectives)
refers to the protection and enhancement of the stability of the
financial system of the UK. However, the provisions of the Act
remain largely untested in practice, particularly in respect of
resolutions of large financial institutions and groups. As a result,
uncertainty exists as to how the Authorities may exercise their
powers including the determination of actions to be undertaken
in relation to the ordinary shares and other securities issued by
the NatWest Group, which, may have an adverse effect on
NWM N.V. Group regardless of the financial condition of NWM
N.V. Group.
If NatWest Group is at or is approaching the point such that
regulatory intervention is required, there may correspondingly
be a material adverse effect on NWM N.V. Group’s future
results, financial condition, prospects, and/or reputation.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
137
Operational and IT resilience risk
Operational risks (including reliance on third-party suppliers
and outsourcing of certain activities) are inherent in NWM
N.V. Group’s businesses.
Operational risk is the risk of loss or disruption resulting from
inadequate or failed internal processes, procedures, people or
systems, or from external events. NWM N.V. Group operates in
several countries, offering a diverse range of products and
services supported directly or indirectly by third-party suppliers.
As a result, operational risks or losses can arise from a number
of internal or external factors (including, for example, payment
errors or financial crime and fraud), for which there is continued
scrutiny by third parties on NWM Group’s compliance with
financial crime requirements.
These risks are also present when NWM N.V. Group relies on
critical service providers (suppliers) or vendors to provide
services to it or its customers, as is increasingly the case as
NWM N.V. Group outsources certain activities, including with
respect to the implementation of technologies, innovation (such
as cloud services and artificial intelligence) and responding to
regulatory and market changes. Furthermore, NWM N.V. is
subject to the European Banking Authority's (‘EBA’) guidelines
on outsourcing arrangements. If the systems and services
provided by NatWest Group, NWM Group or any third party do
not comply with such EBA requirements, there is a risk of
increase in operational and compliance costs, which may
negatively affect NWM N.V. Group’s business continuity and
reputation.
Operational risks also exist due to the implementation of
NatWest Group’s strategy, and the organisational and
operational changes involved, including NatWest Group’s cost-
controlling and simplification measures, continued digitalisation
and the integration of artificial intelligence in the business,
acquisition, divestments and other transactions; the
implementation of recommendations from internal and external
reviews with respect to certain governance processes, policies,
systems and controls of NatWest Group entities; and conditions
affecting the financial services industry generally (including
macroeconomic and other geopolitical developments) as well as
the legal and regulatory uncertainty resulting from these
conditions. Any of the above may place significant pressure on
NWM N.V. Group’s ability to maintain effective internal controls
and governance frameworks.
Financial crime continues to evolve, whether through fraud,
scams, cyberattacks or other criminal activity (including through
the use of artificial intelligence). These risks are exacerbated as
NWM N.V. Group continues to innovate its product offering and
increasingly offers digital solutions to its customers. Financial
crime assessment, systems and controls, Internal stress tests
and models are critical to financial risk management. Ineffective
risk management may arise from a wide variety of factors,
including lack of transparency or incomplete risk reporting,
manual processes and controls, inaccurate data, inadequate IT
systems, unidentified conflicts or misaligned incentives, lack of
accountability control and governance, incomplete risk
monitoring (including trade surveillance) and failures of systems
to properly process all relevant data, risks related to
unanticipated behaviour or performance and management,
insufficient challenges or assurance processes, or a failure to
commence or timely complete risk remediation projects. Weak
or ineffective financial crime processes and controls may risk
NWM N.V. Group inadvertently facilitating financial crime which
may result in regulatory investigation, sanction, litigation, fines
and reputational damage. Further, failure to manage these risks
effectively, or within regulatory expectations, could adversely
affect NWM N.V. Group’s reputation or its relationship with its
regulators, customers, shareholders or other stakeholders. See
‘NWM N.V. Group and NWM Plc are exposed to the risk of
various litigation matters, regulatory and governmental actions
and investigations as well as remedial undertakings, the
outcomes of which are inherently difficult to predict, and which
could have an adverse effect on NWM N.V. Group’.
In recent years, NWM Group (including NWM N.V. Group) has
materially increased its dependence on NatWest Bank Plc for
numerous critical services and operations, including without
limitation, property, technology, finance, accounting, treasury,
legal, risk, regulatory compliance and reporting, financial crime,
human resources, and certain other support and administrative
functions. In addition, NWM N.V. Group has materially increased
its dependence on NWM Plc for numerous critical services
similar to those outlined above and for certain sales activities,
which due to their complexities could potentially trigger
regulatory, tax, reputational, financial crime and conduct risks. A
failure by NatWest Bank Plc or NWM Plc to adequately supply
these services may expose NWM N.V. Group to critical business
failure risk, increased costs, regulatory sanctions, and other
liabilities. These and any increases in the cost of these services
may adversely affect NWM N.V. Group. See also, ‘NWM Group
(including NWM N.V. Group) has been in a period of, and may
continue to be subject to, significant structural and other
change’.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
138
NWM N.V. Group also faces operational risks as it continues to
invest in automation of certain solutions and customer
interactions, including through artificial intelligence. Such
initiatives may result in operational, reputational and conduct
risks if the technology is not used appropriately, is defective, or
inadequate or is not fully integrated into NWM N.V. Group’s
current solutions, systems, and controls. The effective
management of operational risks is critical to meeting customer
service expectations and retaining and attracting customer
business. Although NWM N.V. Group has implemented risk
controls and mitigation actions, with resources and planning
having been devoted to mitigate operational risk, such measures
may not be effective in controlling each of the operational risks
faced by NWM N.V. Group. Ineffective management of such
risks may adversely affect NWM N.V. Group.
Ineffective management of such risks may have a material
adverse effect on NWM N.V. Group’s future results, financial
condition, prospects, and/or reputation.
NWM N.V. Group is subject to sophisticated and frequent
cyberattacks, and compliance with cybersecurity and data
protection regulations is becoming increasingly complex.
NWM N.V. Group experiences a constant threat from
cyberattacks across the entire NatWest Group (including NWM
N.V. Group) and against NatWest Group and NWM N.V. Group’s
supply chain networks, reinforcing the importance of due
diligence of, ongoing risk management of and a close working
relationship with, the third parties on which NWM N.V. Group
relies. NWM N.V. Group is reliant on technology, against which
there is a constantly evolving series of attacks, that are
increasing in terms of frequency, sophistication, impact and
severity. The increased availability of malicious tools and the
rapid advancement of artificial intelligence capabilities reduce
entry barriers for malicious actors and accelerate the
exploitation of vulnerabilities leading to cyberattacks evolving
and becoming more sophisticated. As a result, NWM Group
(which includes NWM N.V. Group) is required to continue to
invest significant resources in additional capability designed to
defend against a variety of existing and emerging threats. Third
parties continue to make hostile attempts to gain access to,
introduce malware (including ransomware) into, and exploit
potential vulnerabilities of, financial services institutions’ IT
systems, including those of NWM Group. For example, in 2025,
NatWest Group and its supply chain were subjected to a small
number of attempted Distributed Denial of Service and
ransomware attacks. These hostile attempts were addressed
without material impact on NatWest Group or its customers by
deploying cybersecurity capabilities and controls that seek to
manage the impact of any such attacks, and sustain availability
of services for NWM Group’s customers. Consequently, NWM
N.V. Group continues to invest significant resources in
developing and evolving cybersecurity capabilities and controls
that are designed to mitigate the potential effect of such
attacks.
However, given the nature of the threat, there can be no
assurance that these capabilities and controls will prevent the
potential adverse effect of any attack from occurring. See also,
‘NWM N.V. Group’s operations are highly dependent on its
complex IT systems, and any IT failure could adversely affect
NWM N.V. Group’.
Any failure in NWM Group’s (including NWM N.V. Group’s)
information and cybersecurity policies, procedures or controls,
may result in significant financial losses, major business
disruption, inability to deliver customer services, or loss of, or
ability to access, data or systems or other sensitive information
(including as a result of an outage) and may cause associated
reputational damage. Any of these factors could increase costs
(including but not limited to costs, relating to notification of, or
compensation for customers and credit monitoring), result in
regulatory investigations or sanctions being imposed or may
affect NWM N.V. Group’s ability to retain and attract customers.
Regulators in the UK, US, Europe and Asia recognise
cybersecurity as an important systemic risk to the financial
sector and have highlighted the need for financial institutions to
improve their monitoring and control of, and resilience
(particularly of critical services) to cyberattacks, and to provide
timely reporting or notification of them, as appropriate (including
the EU Digital Operational Resilience Act (‘DORA’)).
Furthermore, cyberattacks on NWM N.V. Group’s counterparties
may also have an adverse effect on NWM N.V. Group’s
operations.
Additionally, malicious third parties may induce employees,
customers, third-party providers or other users with access to
NWM N.V. Group’s systems to wrongfully disclose sensitive
information to gain access to NWM N.V. Group’s data or
systems or that of NWM N.V. Group’s customers or employees.
Cybersecurity and information security events can derive from
groups or factors such as: internal or external threat actors,
human error, fraud or malice on the part of NWM N.V. Group’s
employees or third parties, including third-party providers, or
may result from technological failure (including defective,
inadequate or inappropriately used artificial intelligence-based
solutions).
NWM N.V. Group expects greater regulatory engagement,
supervision and enforcement by the ECB to continue in relation
to its overall resilience to withstand IT and IT-related disruption,
either through a cyberattack or some other disruptive event.
Such increased regulatory engagement, supervision and
enforcement is uncertain in relation to the scope, cost,
consequence and the pace of change, which may have an
adverse effect on NWM N.V. Group. Due to NWM N.V. Group’s
reliance on technology, the adoption of innovative solutions, the
integration of automated processes and artificial intelligence in
its business, and the increasing sophistication, frequency and
impact of cyberattacks, such attacks may adversely affect NWM
N.V. Group.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
139
In accordance with applicable UK, Dutch and EU data
protection, and cybersecurity laws and regulations (including the
EU General Data Protection Regulation (‘EU GDPR’)), NWM N.V.
Group is required to ensure it implements timely appropriate
and effective organisational and technological safeguards
against unauthorised or unlawful access to the data of NWM
N.V. Group, its customers and its employees. In order to meet
this requirement, NWM N.V. Group relies on the effectiveness of
its internal policies, controls and procedures to protect the
confidentiality, integrity and availability of information held on its
IT systems, networks and devices as well as with third parties
with whom NWM N.V. Group interacts. As NatWest Group
develops new artificial intelligence-based products, proprietary,
sensitive, or confidential NWM N.V. Group’s customer
information may be inputted into third-party generative or other
artificial intelligence or machine learning platforms, and could
potentially be accessed by others, including if such information is
used to train third-party artificial intelligence models. This may
increase the risk of data leakage, data poisoning, potential bias,
discrimination, errors, and misuse. A failure to monitor and
manage data in accordance with applicable requirements may
result in financial losses, regulatory fines and investigations and
associated reputational damage.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. Group’s operations are highly dependent on its
complex IT systems, and any IT failure could adversely affect
NWM N.V. Group.
NWM N.V. Group’s operations are highly dependent on the
ability to process a very large number of transactions efficiently
and accurately while complying with applicable laws and
regulations (including DORA). The proper functioning of NatWest
Group’s (including NWM N.V. Group’s) transactional and
payment systems, financial crime, and fraud detection systems
and controls, risk management, credit analysis and reporting,
accounting, customer service and other IT systems, including
cloud services providers (some of which are owned and
operated by other entities in NatWest Group or third parties), is
critical to NWM N.V. Group’s operations. NWM N.V. Group’s
reliance on a limited number of cloud services providers
increases its exposure to disruption events affecting these cloud
services providers.
Individually or collectively, whether operated by NWM N.V.
Group or by a third-party supplier, any system failure, loss of
service availability (including defective or inadequate automated
processes or artificial intelligence based solutions), or breach of
data security could potentially cause significant damage to (i)
important business services across NWM N.V. Group; and (ii)
NWM N.V. Group’s ability to provide services to its customers,
which could result in reputational damage, significant
compensation costs and regulatory sanctions (including fines
resulting from regulatory investigations) or a breach of
applicable regulations and could affect NWM N.V. Group’s
regulatory approvals, competitive position, business and brands,
which could undermine its ability to attract and retain customers
and talent. NWM N.V. Group outsources certain functions as it
innovates and offers new digital solutions to its customers.
Outsourcing, alongside remote working, heightens the above
risks.
NWM N.V. Group uses IT systems that enable remote working
interface with third-party systems. NWM N.V. Group could
experience service denials or disruptions if such systems exceed
capacity or if a third-party system fails or experiences any
interruptions, all of which could result in business and customer
interruption and related reputational damage, significant
compensation costs, regulatory sanctions and/or a breach of
applicable regulations.
In 2025, NWM Group (which includes NWM N.V. Group)
continued to make considerable investments to further simplify,
upgrade and improve its IT and technology capabilities (including
migration of certain services to cloud platforms and risk-based
removal of technology obsolescence). As part of NWM’s
strategy, NWM Group, including NWM N.V. Group, also
continues to develop and enhance digital services for its
customers and seeks to improve its competitive position through
enhancing controls and procedures and strengthening the
resilience of services including cybersecurity.
Any failure of these investment and rationalisation initiatives to
achieve the expected results, due to cost challenges, poor
implementation, defects, or otherwise, may adversely affect
NWM Group’s operations, its reputation and ability to retain or
grow its customer business or adversely affect its competitive
position, thereby negatively impacting NWM N.V. Group. See
also, ‘NWM Group (including NWM N.V. Group) has been in a
period of, and may continue to be subject to, significant
structural and other change.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. Group operations and strategy are highly
dependent on the accuracy and effective use of data.
NWM N.V. Group relies on the availability, sourcing, and
effective use of accurate and high quality data to support,
monitor, evaluate, manage and enhance its operations, innovate
its products offering, meet its regulatory obligations, and deliver
its strategy. Investment is being made in data tools and
analytics, including raising awareness around ethical data usage
(for example, in relation to the use of artificial intelligence) and
privacy across NWM N.V. Group.
The availability and accessibility of current, complete, detailed,
accurate and, wherever possible, machine-readable customer
segment and sub-sector data, together with appropriate
governance and accountability for data, is fast becoming a
critical strategic asset, which is subject to increased regulatory
focus. Failure to have or to be able to access that data or the
ineffective use or governance of that data could result in a
failure to manage and report important risks and opportunities
or satisfy customers’ expectations including the inability to
deliver products and services. This could also place NWM N.V.
Group at a competitive disadvantage by increasing its costs,
inhibiting its efforts to reduce costs or its ability to improve its
systems, controls and processes. Any of the above could result
in a failure to deliver NWM N.V. Group’s strategy.
These data weaknesses and limitations, or the unethical or
inappropriate use of data, and/or non-compliance with data
protection laws could give rise to, conduct and litigation risks
and may increase the risk of operational challenges, losses,
reputational damage or other adverse consequences due to
inappropriate models, systems, processes, decisions or other
actions.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
140
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. Group relies on attracting, retaining, developing
and remunerating diverse senior management and skilled
personnel, and is required to maintain good employee
relations.
NWM N.V. Group’s success depends on its ability to attract,
retain, and develop highly skilled and qualified diverse
workforce, including senior management, and other employees
in critical roles (such as in client-facing, technology, artificial
intelligence and data), in a highly competitive market.
The inability to compensate employees competitively and/or any
reduction of compensation, heightened regulatory oversight of
banks compared to firms outside of banking and ongoing
restrictions placed on employee compensation arrangements,
particularly in the EU, or other factors, may adversely affect
NWM N.V. Group’s ability to hire, retain and engage well
qualified employees, especially at a senior level, which could
adversely affect NWM N.V. Group.
In addition, certain economic, market and regulatory conditions
may reduce the pool of candidates for key management and
non-executive roles, including non-executive directors with the
right skills, knowledge and experience, or may increase the
number of departures of existing employees. Moreover, a failure
to foster a diverse workforce and an inclusive work environment
may adversely affect NWM N.V. Group’s employee engagement
and the execution of its strategy and could also have an
adverse effect on its reputation with customers, investors and
regulators.
NWM N.V. Group’s businesses are also exposed to risks from
employee, contractor, or service providers misconduct including
non-compliance with policies and regulations, negligence or
fraud (including financial crimes and fraud), any of which could
result in regulatory fines or sanctions and serious reputational or
financial harm to NWM N.V. Group. Hybrid working
arrangements for NWM N.V. Group employees place heavy
reliance on the IT systems that enable remote working and may
place additional pressure on NWM N.V. Group’s ability to
maintain effective internal controls, governance frameworks,
and increase operational risk. Hybrid working arrangements are
also subject to regulatory scrutiny to ensure adequate
recording, surveillance and supervision of regulated activities
and compliance with regulatory requirements and expectations,
including requirements to: meet threshold conditions for
regulated activities; ensure the ability to oversee functions
(including any outsourced functions); ensure no detriment is
caused to customers; and ensure no increased risk of financial
crime.
Some of NWM N.V. Group’s employees are represented by
employee representative bodies, including works councils.
Engagement with its employees and such bodies is important to
NWM N.V. Group in maintaining good employee relations. Any
breakdown of these relationships may adversely affect NWM
N.V. Group.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
A failure in NWM N.V. Group’s risk management framework
could adversely affect NWM N.V. Group, including its ability
to achieve its strategic objectives.
Risk management is a fundamental component of NatWest
Group’s operations and is critical to the effective delivery of its
long-term strategic objectives. NWM N.V. Group operates within
NWM Group’s Risk Management Framework (‘NWM RMF’),
which sets the approach for risk management and outlines key
principles for sound risk governance and setting of risk appetite
with respect to: financial risk (capital risk, liquidity and funding
risk, credit risk, traded market risk, non-traded, market risk,
pension risk, earning stability risk) and non-financial risk (model
risk, reputational risk, financial crime, operational risk, and
compliance and conduct risk). Non-compliance with this
framework, including deviations from risk appetite, or any
significant shortcomings in related controls and procedures, may
have an adverse effect on NatWest Group’s financial condition,
strategic delivery, or result in inaccurate reporting of risk
exposures.
NWM N.V. Group promotes a risk-aware culture and invests in
policies and resources to manage risks. However, these
measures may not entirely prevent a failure in NatWest Group’s
risk management framework within which NWM N.V. Group
operates. For example, instances of misconduct may arise from:
business decisions, actions or reward mechanisms that fail to
comply with NWM N.V. Group’s regulatory obligations, do not
adequately address customers’ needs or are misaligned with
NWM N.V. Group’s strategic objectives, ineffective product
management, unethical or
inappropriate use of data, information
asymmetry, implementation and utilisation of new technologies,
outsourcing of customer service and product delivery,
inappropriate behaviour towards customers, customer
outcomes, the possibility of mis-selling of financial products and
mishandling of customer complaints. Any failure in the NWM
RMF may result in the inability for NWM N.V. Group to achieve
its strategic objectives for its customers, employees and wider
stakeholders.
Furthermore, NWM N.V. Group has policies and controls in place
to prevent and detect financial crime and has invested in
technology and capability to enhance financial crime controls.
NWM N.V. Group also relies on NatWest Group to operate a
certain number of its financial crime controls. If these risk
policies and controls are inadequate to combat financial crime,
particularly in NWM N.V. Group’s branches (where there is less
direct supervision), there could be an adverse effect on NWM
N.V. Group.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
141
NWM N.V. Group’s operations are subject to inherent
reputational risk.
Reputational risk relates to stakeholder and public perceptions
of NWM N.V. Group arising from an actual or perceived failure
to meet stakeholder or the public’s expectations, including with
respect to NatWest Group’s strategy and related targets, NWM
Group’s strategy, or due to any events, behaviour, action or
inaction by NWM N.V. Group, its employees or those with whom
NWM N.V. Group is associated. See also, ‘NWM N.V. Group’s
businesses are subject to substantial regulation and oversight,
which are constantly evolving and may adversely affect NWM
N.V. Group.’ This includes harm to its brand, which may be
detrimental to NWM N.V. Group’s business, including its ability to
build or sustain business relationships with customers,
stakeholders and regulators, and may cause low employee
morale, regulatory censure or reduced access to, or an increase
in the cost of, funding.
Reputational risk may arise whenever there is, or there is
perceived to be, a material lapse in standards of integrity,
controls, compliance, customer or operating efficiency, or
regulatory or press scrutiny, and may adversely affect NWM
N.V. Group’s ability to attract and retain customers. In
particular, NWM N.V. Group’s ability to attract and retain
customers and talent, and engage with counterparties may be
adversely affected by factors including: negative public opinion
resulting from the actual or perceived manner in which NWM
N.V. Group or any other member of NatWest Group conducts or
modifies its business activities and operations, media coverage
(whether accurate or otherwise), employee misconduct, NWM
N.V. Group’s financial performance, IT systems failures or
cyberattacks, data breaches, financial crime and fraud, the
actual or perceived practices in the banking and financial
industry in general, or a wide variety of other factors.
Technologies, in particular online social networks and other
broadcast tools that facilitate communication with large
audiences in short timeframes and with minimal costs, may also
significantly increase and accelerate the impact of damaging
information and allegations. Although NWM N.V. Group has a
Reputational Risk Policy and framework to identify, measure and
manage material reputational risk exposures, NWM N.V. Group
cannot be certain that it will be successful in avoiding damage to
its business from reputational risk.
Any of the above aspects of reputational risk may have a
material adverse effect on NWM N.V. Group’s future results,
financial condition, prospects, and/or reputation.
Legal, regulatory and conduct risk
NWM N.V. Group’s businesses are subject to substantial
regulation and oversight, which are constantly evolving and
may adversely affect NWM N.V. Group.
NWM N.V. Group is subject to extensive laws, regulations,
guidelines, corporate governance practice and disclosure
requirements, administrative actions and policies in each
jurisdiction in which it operates, which represents ongoing
compliance and conduct risk. Many of these are constantly
evolving and are subject to further material changes, which may
increase compliance and conduct risks, particularly as the laws
of different jurisdictions (including those of the EU/EEA and UK)
diverge.
NWM N.V. Group is subject to (i) direct prudential supervision by
the ECB; (ii) direct market conduct supervision by the AFM and
indirect market conduct supervision by the European Securities
and Markets Authority; and (iii) supervision by DNB, as home
state supervisor, in respect of NWM N.V. Group’s branches in
the Netherlands, France, Germany, Italy, and Sweden, and to
supervision by local regulators in these jurisdictions, as host
state supervisors, in respect of certain regulatory aspects of
NWM N.V. Group’s branches operations that are subject to
home or host state supervision (e.g. anti-money laundering
laws). NWM N.V. Group expects government and regulatory
intervention in the financial services industry to remain high for
the foreseeable future.
Prudential regulatory requirements
:
Regulators and governments continue to focus on reforming the
prudential regulation of the financial services industry and the
manner in which the business of financial services is conducted.
Measures have included: enhanced capital, liquidity and funding
requirements through initiatives such as the Basel 3.1 standards
implementation (and any resulting effect on RWAs and models),
the UK ring-fencing regime, the strengthening of the recovery
and resolution framework applicable to financial institutions in
the Netherlands, the EU proposed reform of bank crisis
management and deposit insurance framework, the EU, the UK
and the US, financial industry reforms (such as the Financial
Services and Markets Act 2023 (‘FSMA 2023’), corporate
governance requirements, rules relating to the compensation of
senior management and other employees, financial market
infrastructure reforms, enhanced regulations in respect of the
provision of ‘investment services and activities’.
There is also increased regulatory focus in certain areas,
including conduct, model risk governance, client protection in
financial markets, competition and disputes regimes, anti-money
laundering, anti-corruption, anti-bribery, anti-tax evasion,
payment systems, sanctions and anti-terrorism laws and
regulations. This has resulted in NWM N.V. Group facing greater
regulation and scrutiny in the Netherlands and the other
countries in which it operates. Should NWM N.V. not meet
certain supervisory criteria, remedial action or changes to the
business may be required. Any such actions or changes may
harm the reputation of NWM N.V. Group and may also require
additional resources and funds which may need to be diverted
from other parts of the business which may, in turn, adversely
affect NWM N.V. Group.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
142
Regulatory requirements:
Uncertainties remain as to the extent to which EU/EEA laws will
diverge from UK law. For example, bank regulation in the UK
may diverge from European bank regulation following the
enactment of the FSMA 2023 and the Retained EU Law
(Revocation and Reform) Act 2023. In particular, FSMA 2023
provides for the revocation of retained EU laws relating to
financial services regulation, but sets out that this process will
likely take a number of years and that the intention is that
specific retained EU laws will not be revoked until such time as
replacement regulatory rules are in place. Significant
uncertainties remain as to whether and what equivalence
determinations will be made by the various regulators, whether
banking services will be harmonised across the EEA and,
therefore, what the respective legal and regulatory
arrangements will be, under which NWM N.V. Group as a
subsidiary of NWM Group will operate. This divergence could
lead to further market fragmentation. The actions taken by
regulators in response to any new or revised bank regulation
and other rules affecting financial services, may adversely affect
NWM Group, including its business, non-UK operations, group
structure (including NWM N.V. Group), compliance costs,
intragroup arrangements and capital requirements.
Moreover, recent regulatory changes and heightened levels of
public and regulatory scrutiny in the EU have resulted in
changes in the competitive landscape, changes in other
regulatory requirements and increased operating costs, and
have impacted, and will continue to impact, product offering and
business models. For example, there is significant oversight by
competition authorities of the jurisdictions in which NWM N.V.
Group operates. The competitive landscape for banks and other
financial institutions in Europe, the UK and the US is rapidly
changing. Recent regulatory and legal changes have and may
continue to result in new market participants and changed
competitive dynamics in certain key areas. Regulatory and
competition authorities are also looking at and focusing more on
how they can support competition and innovation in digital and
other markets.
Other areas in which, and examples of where, governmental
policies, regulatory and accounting changes and increased
public and regulatory scrutiny may adversely affect (some of
which could be material) NWM N.V. Group include, but are not
limited to, the following:
•
general changes in government, central bank, regulatory or
competition policy, or changes in regulatory regimes that
may influence investor decisions in the jurisdictions in which
NWM N.V. Group operates;
•
rules relating to foreign ownership, expropriation,
nationalisation and confiscation or appropriation of assets;
•
new or increased regulations relating to customer data
protection as well as IT controls and resilience;
•
the introduction of, and changes to, taxes, levies or fees
applicable to NWM N.V. Group’s operations, which may
require increased payments of tax, changes in tax rates,
restrictions on the tax deductibility of interest payments or
further restrictions on the set-off of carry-forward tax
losses;
•
increased innovation in private digital asset propositions,
such as stablecoin or tokenised deposits, which may
challenge traditional payment methods and have other
potential adverse effects on the banking industry (such as
higher funding costs or a reduced deposit base);
•
increased risk of legal action against NWM N.V. Group for
financing or contributing to climate change and nature-
related degradation, or greenwashing;
•
new or increased regulations relating to financial crime; and
•
any regulatory requirements relating to the use of artificial
intelligence and large language models across the financial
services industry (such as the European Union Artificial
Intelligence Act).
Any of these developments (including any failure to comply with,
or correctly interpret, new rules and regulations) could also have
a significant impact on NWM N.V. Group’s authorisations and
licences, the products and services that NWM N.V. Group may
offer, its reputation and the value of its assets, NWM N.V.
Group’s operations or legal entity structure, and the manner in
which NWM N.V. Group conducts its business. Material
consequences could arise should NWM N.V. Group be found to
be non-compliant with these regulatory requirements.
Regulatory developments may also result in an increased
number of regulatory investigations and proceedings and have
increased the risks relating to NWM N.V. Group’s ability to
comply with the applicable body of rules and regulations in the
manner and within the timeframes required. See also, ‘NWM
N.V. Group and NWM Plc are exposed to the risk of various
litigation matters, regulatory and governmental actions and
investigations as well as remedial undertakings, the outcomes of
which are inherently difficult to predict, and which could have an
adverse effect on NWM N.V. Group’.
Changes in laws, rules or regulations, or in their interpretation
or enforcement, or the implementation of new laws, rules or
regulations, including contradictory or conflicting laws, rules or
regulations by key regulators or policymakers in different
jurisdictions, or failure by NWM N.V. Group to comply with such
laws, rules and regulations, may adversely affect NWM N.V.
Group’s business, results of operations and outlook. In addition,
uncertainty and insufficient international regulatory coordination
as enhanced supervisory standards are developed and
implemented may adversely affect NWM N.V. Group’s
reputation, ability to engage in effective business, capital and
risk management planning.
Any of the above could have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
NWM N.V. Group and NWM Plc are exposed to the risk of
various litigation matters, regulatory and governmental
actions and investigations as well as remedial undertakings,
the outcomes of which are inherently difficult to predict, and
which could have an adverse effect on NWM N.V. Group.
NWM N.V. Group’s operations are diverse and complex and it
operates in legal and regulatory environments that expose it to
potentially significant civil actions (including those following on
from regulatory sanction), as well as criminal, regulatory and
governmental proceedings. NWM N.V. Group and NWM Plc
have resolved a number of legal and regulatory actions over the
past several years but continues to be, and may in the future
be, involved in such actions in the US, the UK, Europe and other
jurisdictions.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
143
NWM N.V. Group and/or NWM Plc are, have recently been and
will likely be involved in a number of significant legal and
regulatory actions, including investigations, proceedings and
ongoing reviews (both formal and informal) by governmental law
enforcement and other agencies and litigation proceedings,
including in relation to the offering of securities, conduct in the
foreign exchange market, the setting of benchmark rates such
as LIBOR and related derivatives trading, the issuance,
underwriting, and sales and trading of fixed-income securities
(including government securities), product mis-selling, customer
mistreatment, anti-money laundering, antitrust, VAT recovery,
record keeping, reporting, and various other issues. There is
also an increasing risk of activist actions, particularly relating to
climate change and sustainability-related matters. Legal and
regulatory actions are subject to many uncertainties, and their
outcomes, including the timing, amount of fines, damages or
settlements or the form of any settlements, which may be
material and in excess of any related provisions, are often
difficult to predict, particularly in the early stages of a case or
investigation. NWM N.V. Group’s expectation for resolution may
change and substantial additional provisions and costs may be
recognised in respect of any matter.
The resolution of significant investigations includes NWM Plc’s
December 2021 spoofing-related guilty plea in the United States
that was agreed with the US Department of Justice (‘DOJ’), and
involves a multi-year period of probation, ongoing commitments
to improve the compliance programme and reporting
obligations. In the event that NWM Plc does not meet its
obligations to the DOJ, this may lead to adverse consequences
such as findings that NWM Plc violated its probation term and
possible re-sentencing, and/or increased costs, amongst other
consequences. For additional information relating to this and
other legal and regulatory proceedings and matters to which
NatWest Group is currently exposed, see ‘Litigation and
regulatory matters’ at Note 25 to the NatWest Group
consolidated accounts.
Recently resolved matters or adverse outcomes or resolution of
current or future legal or regulatory matters, could increase the
risk of greater regulatory and third-party scrutiny and could
have material financial, reputational, or collateral consequences
for NWM Group’s (including NWM N.V. Group’s) business and
result in restrictions or limitations on NWM Group’s (including
NWM N.V. Group’s) operations.
These may include the effective or actual disqualification from
carrying on certain regulated activities and consequences
resulting from the need to reapply for various important licences
or obtain waivers to conduct certain existing activities of NWM
N.V. Group, particularly but not solely in the US, which may take
a significant period of time and the results and implications of
which are uncertain. Disqualification from carrying on any
activities, whether automatically as a result of the resolution of a
particular matter or as a result of the failure to obtain such
licences or waivers could adversely affect NWM N.V. Group’s
business, in particular in the US. This in turn and/or any fines,
settlement payments or penalties may have an adverse effect
on NWM N.V. Group. Similar consequences could result from
legal or regulatory actions relating to other parts of NatWest
Group.
Failure to comply with undertakings made by NWM N.V. Group
to its regulators, or the conditions of probation resulting from
the spoofing-related guilty plea may result in additional
measures or penalties being taken against NWM N.V. Group. In
addition, any failure to administer conduct redress processes
adequately, or to handle individual complaints fairly or
appropriately, could result in further claims as well as the
imposition of additional measures or limitations on NWM N.V.
Group’s operations, additional supervision by NWM N.V. Group’s
regulators, and loss of investor confidence.
Any of the above may have a material adverse effect on NWM
N.V. Group’s future results, financial condition, prospects, and/or
reputation.
Climate and sustainability-related risks
NWM N.V. Group and its Value Chain face climate and
sustainability-related risks that may adversely affect NWM
N.V. Group.
NWM N.V. Group is subject to financial and non-financial risks
associated with climate change, nature-related and social
matters (together sustainability-related matters). These matters
impact NWM N.V. Group directly through its own operations and
employees, and indirectly through its value chain, including its
investors, customers, counterparties and suppliers, and business
partners, (collectively, our ‘Value Chain’), and business activities.
Financial and non-financial risks from climate change can arise
through physical and transition risks. In addition, NWM N.V.
Group may also be exposed to legal, regulatory or financial
consequences arising from NWM N.V. Group’s actions or
omissions related to climate and sustainability-related matters,
giving rise to liability risk.
Climate-related physical risks are associated with increasing
frequency and intensity of extreme weather events, including
floods, wildfires and changes in climate conditions. Such events
can impact employee health and safety, negatively impact local
communities where NWM N.V. Group operates, damage assets,
property and infrastructure, and disrupt operations and supply
chains, resulting in changes in asset value, deterioration of the
value of collateral or insurance shortfalls and increased costs
and credit defaults. This can negatively impact the
creditworthiness of customers and their ability and/or willingness
to pay fees, afford new products or repay their debts, leading to
increased default rates, delinquencies, write-offs and impairment
charges in NWM N.V. Group’s portfolios while simultaneously
increasing NWM N.V. Group’s own operational costs and
exposing it to potential business continuity challenges. In
addition, NWM N.V. Group’s premises and operations, or those
of its critical outsourced functions may experience damage or
disruption leading to increased costs for NWM N.V. Group.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
144
Climate-related transition risks arise from The Netherlands’ and
global economies’ shift to net zero. The pace and nature of
transition, whether orderly or disorderly, depends significantly
on timely and appropriate government policy and regulatory
changes, immediate actions from national and regional
governments, new technological innovation, changes to supply
and demand systems within industries, customer behaviour and
market sentiment. In addition, there is significant uncertainty
about how climate change and the world’s transition to a net-
zero economy will unfold over time and how and when climate
and other sustainability-related risks will manifest. This could
adversely impact profitability, market stability and the resilience
of financial institutions, including NWM N.V. Group. In addition,
the transition may affect NWM N.V. Group’s customers and
businesses across sectors in different ways and at different
levels of risk. These timeframes are considerably longer than
NWM N.V. Group’s historical and current strategic, financial,
resilience and investment planning horizons. Transition risks may
also trigger reputational and liability exposures, especially if
NatWest Group (including NWM N.V. Group) is perceived as not
meeting its climate ambitions, targets and commitments, or not
making progress against NatWest Group’s climate transition
plan.
Moreover, beyond climate change, NWM N.V. Group and its
Value Chain may face financial and non-financial risks arising
from acute or chronic nature-related physical risks, (such as
wildfires, pollution, water stress and loss of biodiversity), nature-
related transition risks (such as risk arising directly or indirectly
due to changes in policy, market and technology, changes in
perception concerning an organisation’s actual or perceived
nature impacts and from legal claims) and social issues (such as
data protection and privacy, impact of increased adoption of
artificial intelligence technology, human rights abuse, conflict
and security, land rights, labour rights and unjust working
conditions, modern slavery and child labour, discrimination and
lack of support for the vulnerable, negative impact on people’s
standard of living and health, inequality, accessible banking and
financial inclusion, and financial crime). There are heightened
regulatory expectations, growing scrutiny from investors, civil
society, and other external stakeholders, with businesses being
increasingly expected to be transparent about their efforts to
identify, assess, mitigate and manage nature-related and social
risks. NWM N.V. Group may face reputational, regulatory non-
compliance and litigation risks if it is directly or indirectly linked
to adverse nature-related or social impacts and fails to
adequately manage the risks associated with those impacts.
Climate and sustainability-related risks are inter-linked and may
(i) adversely impact the broader economy – affecting interest
rates, inflation and growth – which in turn may reduce
profitability and financial stability; (ii) adversely impact asset
pricing and valuations of NWM N.V. Group’s and other
securities, potentially triggering wider disruptions across the
financial system; (iii) adversely impact the viability or resilience of
business models over the medium to longer term, particularly
those business models most vulnerable to climate and
sustainability-related risks; (iv) result in losses from liability or
reputational damage, such as negative media, activist pressure,
or public criticism, if NWM N.V. Group or its Value Chain are
linked to adverse climate or sustainability-related impacts; and
(v) may intensify existing exposures across multiple risk
categories, including credit, operational (e.g. business continuity),
market and liquidity, model, reputational regulatory compliance,
conduct and pension risks.
Failure by NWM N.V. Group to timely identify, assess, mitigate
and manage climate and sustainability-related risks, as well as
failure to respond to emerging opportunities, evolving regulatory
requirements, and shifting market and external expectations,
may have a material adverse effect on NWM N.V. Group’s
business, financial condition, future results, access to finance,
cost of capital, reputation, and the value of its securities.
NatWest Group’s (including NWM N.V. Group) strategy
relating to climate and sustainability is subject to execution
and reputational risks. NatWest Group’s (including NWM N.V.
Group) climate and sustainability-related ambitions, targets
and commitments may not be achieved, and NatWest
Group’s climate transition plan may not be implemented,
without timely and appropriate government policy,
technology developments, and suppliers, customers and
society supporting the transition.
NatWest Group has an ambition to be net zero across its
financed emissions, assets under management and operational
value chain by 2050. NatWest Group also has an ambition to at
least halve the climate impact of its financing activity by 2030,
against a 2019 baseline, supported by portfolio-level activity-
based targets. NatWest Group may also announce other climate
and sustainability-related ambitions, targets and commitments,
and may withdraw, retire, amend, replace or supersede existing
ones from time to time, whether or not they have been
achieved, where it considers this to be appropriate having
regard to its strategic objectives, or where required or
appropriate to do so by applicable law, regulation or supervisory
expectations.
NWM N.V. Group’s ability to contribute to achieving NatWest
Group’s climate and sustainability-related ambitions, targets and
commitments, and to contribute to implementing NatWest
Group’s climate transition plan, may require NWM N.V. Group to
make changes to its business, operating model, existing
exposures, and products and services. This may include
reducing its estimated financed emissions and discontinuing
certain activities over time. NatWest Group (including NWM N.V.
Group) acknowledge that (i) emission reductions are unlikely to
be linear; (ii) UK Parliament will set a new legal limit on
greenhouse emissions as part of the Seventh Carbon Budget in
June 2026 which may have an impact on the achievement of
NatWest Group’s (including NWM Group) climate and
sustainability-related ambitions, targets and commitments, and
the implementation of NatWest Group’s climate transition plan;
and (iii) increases in lending and financing activities may wholly
or partially offset some or all of these reductions, which may
increase the extent of changes and reductions necessary.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
145
NWM N.V. Group’s ability to contribute to achieving NatWest
Group’s strategy, including its climate and sustainability-related
ambitions, targets and commitments, and to contribute to
implementing NatWest Group’s climate transition plan is
dependent on many factors and uncertainties beyond NWM N.V.
Group’s control. These include (but are not limited to): (i) the
extent and pace of climate change, including the timing and
manifestation of physical and transition risks and nature loss; (ii)
the macroeconomic environment; (iii) the effectiveness of
actions of governments, legislators, regulators and businesses;
(iv) the response of wider society, NWM N.V. Group’s Value
Chain and other stakeholders to mitigate the impact of climate
and sustainability-related risks; (v) changes in customer and
societal behaviour and demand; (vi) availability of commercially
viable opportunities in sustainable finance markets, competition
dynamics, capital markets appetite, investor expectations, and
external credit and concentration risk appetites which may
constrain the scale or risk profile of opportunities accessible to
NWM N.V. Group; (vii) developments in available technology;
(viii) the rollout of low carbon infrastructure; and (ix) the
availability of accurate, verifiable, reliable, auditable, consistent
and comparable data.
These external factors and other uncertainties, including the
potential for increased exposure to customers in hard-to-abate
sectors as a result of the Transfer Business, may make it
complex for NWM N.V. Group to contribute to achieving
NatWest Group’s climate and sustainability-related ambitions,
targets and commitments, and to contribute to implementing
NatWest Group’s climate transition plan, and there is a risk that
some or all of NatWest Group’s ambitions, targets and
commitments may not be achieved, or NatWest Group’s climate
transition plan may not be implemented, within the intended
timescales, or at all.
Moreover, the rising energy demand associated with artificial
intelligence workloads, whether generated internally or through
third
party providers, may increase NatWest Group’s (including
NWM N.V. Group’s) own operational footprint. While NatWest
Group (including NWM N.V. Group) have taken initial steps to
assess the potential impacts of increased AI usage, its full effects
on NatWest Group’s (including NWM N.V. Group’s) own
operational footprint remain uncertain but could have an
adverse effect on NatWest Group’s (including NWM N.V.
Group’s) progress towards NatWest Group’s (including NWM
N.V. Group’s) climate and sustainability-related ambitions,
targets and commitments and on the progress against NatWest
Group’s climate transition plan.
Any delay or failure by NWM N.V. Group in putting into effect,
making progress against or contributing to achieving NatWest
Group’s climate and sustainability-related ambitions, targets and
commitments, and to contributing to the implementation of
NatWest Group’s climate transition plan may have a material
adverse effect on NWM N.V. Group’s future results, financial
condition, prospects, and/or reputation and may increase the
climate and sustainability-related risks NWM N.V. Group faces.
There are significant limitations related to accessing
accurate, reliable, verifiable, auditable, consistent and
comparable climate and sustainability-related data that
contribute to substantial uncertainties in accurately
assessing, managing and reporting on climate and
sustainability-related information and risks, as well as
making informed decisions.
NWM N.V. Group’s ability to assess, manage, and report climate
and sustainability-related impacts, risks, and opportunities,
including the effective measurement, governance and reporting
of progress against our climate and sustainability-related
ambitions, targets and commitments, and the implementation of
NatWest Group’s climate transition plan, heavily depends on the
availability of accurate, reliable, verifiable, auditable, consistent
and comparable internal and external data from customers,
counterparties, suppliers, and third parties. Our internal data on
customer groups, which is used to source financial exposure
and emissions data, and the systems and controls supporting
our non-financial reporting are considerably less sophisticated
than those data, systems and controls used for financial
reporting and continue to involve manual processes.
These factors may increase the risk of inaccuracies or gaps in
our non
financial reporting, which could adversely affect our
ability to meet regulatory, investor or stakeholder expectations.
In the absence of accurate, reliable, verifiable, auditable,
consistent and comparable data, NWM N.V. Group may rely on
estimates, proxies, or third-party methodologies - such as
sectoral averages or aggregated emissions data - that may be
outdated, prepared using varying assumptions, or not
accurately reflect specific counterparties or customers. These
limitations can affect the reliability of disclosures, including
financed and facilitated emissions, and may hinder decision-
making, risk management, regulatory compliance, and data
consolidation. This may result in misjudging progress against
climate ambitions, targets, and commitments, misallocating
capital, or underestimating financial and reputational risks, while
also reducing comparability across institutions and increasing
scrutiny from stakeholders and regulators.
NWM N.V. Group’s assessment of climate and sustainability-
related impacts, risks, and opportunities is expected to evolve as
data quality and methodologies improve. Current data gaps,
limitations, and reliance on estimates or third-party inputs may
materially impact NWM N.V. Group’s ability to make informed
decisions on climate and sustainability-related matters, manage
risks, comply with disclosure requirements, and monitor
progress against NatWest Group’s climate and sustainability-
related ambitions, targets and commitments, and the
implementation of NatWest Group’s climate transition plan. As a
result, climate and sustainability-related disclosures may be
amended, updated, or restated from time to time as
methodologies, data quality or regulatory expectations evolve.
NWM N.V. Group does not undertake to restate prior disclosures
except as required by applicable law or regulation, even where
subsequently available data or methodologies differ from those
used at the time of the original disclosure. Climate risks are
inherently forward-looking and complex to model. The lack of
historical data, evolving scientific understanding, and immature
measurement frameworks introduce significant uncertainty into
scenario analysis and financial forecasting. The outputs of
climate risk modelling, such as emissions pathways and
reduction targets, are subject to long timeframes and
assumptions that differ significantly from traditional financial
planning cycles.
Risk factors continued
NatWest Markets N.V.
Annual Report and Accounts 2025
146
NWM N.V. Group’s internal capabilities to assess, model, report
on and manage climate and sustainability-related risks continue
to evolve. However, even when such capabilities are suitably
developed, the high level of uncertainty regarding any
assumptions modelled, the highly subjective nature of risk
measurement and mitigation techniques coupled with persistent
data gaps may result in inadequate risk management
information and frameworks, or ineffective business adaptation
or mitigation strategies or regulatory non-compliance.
Any of the above may have a material adverse effect on NWM
N.V. Group’s business, future results, financial condition,
prospects, reputation and the price of its securities.
NWM N.V. Group is subject to an increasingly complex and
evolving landscape of climate and sustainability-related legal,
regulatory, and supervisory expectations and there is an
increasing risk of regulatory non-compliance, investigations,
litigation, and enforcement actions.
NWM N.V. Group is subject to an increasingly complex and
evolving landscape of climate and sustainability-related legal,
regulatory, and supervisory expectations, which may vary
significantly and remain fragmented across the UK, The
Netherlands, the EU, US, and other jurisdictions in which NWM
N.V. Group operates. This growing divergence creates legal and
operational uncertainty, may expose NWM N.V. Group to
conflicting legal and regulatory requirements, and may increase
the risks of regulatory non-compliance, regulatory enforcement
and reputational damage.
The growing politicisation and polarisation of climate and
sustainability-related matters across jurisdictions may further
exacerbate existing risks and result in reduced market access,
adverse public perception, or stakeholder disengagement.
Customers, investors, or stakeholders may choose not to
engage with NWM N.V. Group if they perceive NatWest Group’s
(including NWM N.V. Group) strategy in relation to climate and
sustainability as either lacking ambition or progress, or
conversely, as overly focused on climate and sustainability, or if
they object to specific climate or sustainability
related decisions
or sectoral policies adopted by NatWest Group (including NWM
N.V. Group), which may adversely affect customer relationships,
investor sentiment or stakeholder engagement. For example,
financing the transition of hard-to-abate sectors may be viewed
by some as misaligned with climate goals, potentially resulting in
reputational damage. At the same time, regulatory and
enforcement approaches to climate and sustainability-related
matters are increasingly diverging and, in some cases,
conflicting across jurisdictions. While some authorities are
advancing stricter requirements, others are introducing
sanctions targeting institutions that pursue climate and
sustainability-related initiatives.
Furthermore, NWM N.V. Group may face litigation, complaints
or other forms of challenge from shareholders, customers,
campaign groups or other stakeholders arising from allegations
of actual or perceived environmental or social harm, including
climate-related impacts, nature-related degradation, human
rights abuses, or deficiencies in governance and due diligence
practices. At the same time, NWM N.V. Group may face
contradictory legal or regulatory action asserting that it has
placed undue or disproportionate focus on climate and
sustainability
related considerations.
Failure by NWM N.V. Group to comply with evolving legal and
regulatory requirements, or supervisory expectations - including
divergent and fragmented frameworks across jurisdictions,
where relevant - may increase the risk of regulatory non-
compliance, may adversely impact NWM N.V. Group’s ability to
contribute to achieving NatWest Group’s climate and
sustainability-related ambitions, targets and commitments, and
to contribute to implementing NatWest Group’s climate
transition plan, and may adversely impact its investor base and
reputation. It may also result in regulatory non-compliance
investigations, litigation and enforcement actions, which in turn
may have a material adverse effect on NWM N.V. Group’s
business, future results, financial condition, prospects,
reputation, and the price of its securities.
Additional information
NatWest Markets N.V.
Annual Report and Accounts 2025
147
Major shareholders
NatWest Markets N.V. is 100% owned by RBS Holdings N.V. In turn, RBS Holdings N.V. is a 100% subsidiary of NatWest Markets Plc.
Stock exchange listings
None of the shares in the NatWest Markets N.V. Group are listed.
Issued share capital
The issued share capital of NWM N.V. consists of 11,112 ordinary shares with a nominal value of €4.50 each.
Dividends
The NatWest Markets N.V. Group's policy is to pay dividends on ordinary shares taking account the capital position and prospects. For
further information on the payment of dividends, refer to Note 18 to the consolidated financial statements.
Off-balance sheet arrangements
NatWest Markets N.V. Group has no off-balance sheet arrangements that have or are reasonably likely to have an adverse effect on
its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources.
For further information on off-balance sheet commitments and contingent liabilities refer to Note 22 to the consolidated financial
statements.
Forward-looking statements
This document may include forward-looking statements within the meaning of the United States Private Securities Litigation Reform
Act of 1995, such as statements with respect to NWM N.V. Group’s financial condition, results of operations and business, including its
strategic priorities, financial, investment and capital targets, and climate and sustainability-related targets, commitments and ambitions
described herein. Statements that are not historical facts, including statements about NWM N.V. Group’s beliefs and expectations, are
forward-looking statements. Words, such as ‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘commit’, ‘believe’, ‘should’, ‘intend’, ‘will’, ‘plan’,
‘could’, ‘target’, ‘goal’, ‘objective’, ‘may’, ‘outlook’, ‘prospects’ and similar expressions or variations on these expressions are intended
to identify forward-looking statements. In particular, this document may include forward-looking statements relating, but not limited to:
NWM N.V. Group’s economic and political risks, financial position, profitability and financial performance (including financial, capital,
cost savings and operational targets), the implementation of NWM N.V. Group’s strategy and NWM Plc Group’s strategy, its climate
and sustainability-related ambitions and targets, its access to adequate sources of liquidity and funding, its regulatory capital position
and related requirements, its impairment losses and credit exposures under certain specified scenarios, substantial regulation and
oversight, ongoing legal, regulatory and governmental actions and investigations. Forward-looking statements are subject to a number
of risks and uncertainties that might cause actual results and performance to differ materially from any expected future results or
performance expressed or implied by the forward-looking statements. Factors that could cause or contribute to differences in current
expectations include, but are not limited to, the outcome of legal, regulatory and governmental actions and investigations, the level and
extent of future impairments and write-downs, legislative, political, fiscal and regulatory developments, accounting standards,
competitive conditions, technological developments such as artificial intelligence, interest and exchange rate fluctuations, general
economic and political conditions and uncertainties, exposure to third party risk, operational risk, conduct risk, cyber, data and IT risk,
financial crime risk, key person risk, credit rating risk and the impact of climate and sustainability-related risks and the transitioning to
a net zero economy. These and other factors, risks and uncertainties that may impact any forward-looking statement or NWM N.V.
Group’s actual results are discussed in NWM N.V. Group’s 2025 Annual Report and Accounts, and its other public filings. The forward-
looking statements contained in this document speak only as of the date of this document and NWM N.V. Group does not assume or
undertake any obligation or responsibility to update any of the forward-looking statements contained in this document, whether as a
result of new information, future events or otherwise, except to the extent legally required.
Additional cautionary statement regarding climate and sustainability-related data, metrics
and other matters
Data availability, accuracy, verifiability and data gaps
Our climate and sustainability-related disclosures are limited by the availability of high-quality, verifiable, accurate, reliable, auditable,
consistent and comparable data in some areas and our own ability to timely collect and process such data. These limitations affect the
accuracy and completeness of climate and sustainability-related disclosures.
Users are therefore advised to interpret the disclosures
with appropriate caution, taking into account the assumptions, data sources and constraints.
Use of proxies or aggregated sector-level data
Significant data gaps persist across sectors and sub-sectors. When adequate climate and sustainability-related data is not publicly
available or cannot be obtained directly from individual counterparties, financial institutions often rely on proxies or aggregated sector-
level data provided by third parties. However, this data may be based on varying methodologies, assumptions, or interpretations,
which may not accurately reflect underlying climate and sustainability-related characteristics and can lead to inconsistencies and
reduce its accuracy. In addition, there is currently no single global data provider that offers comprehensive, consistent coverage of the
data needed to assess emissions and climate and sustainability-related risks across sectors and portfolios. Climate and sustainability-
related reporting frameworks differ in how they define and measure data quality, and customers vary widely in how they collect and
disclose climate and sustainability-related data.
Additional information continued
NatWest Markets N.V.
Annual Report and Accounts 2025
148
Reliance on assumptions, scenarios and uncertainty in climate and sustainability-related metrics
The climate and sustainability-related disclosures included in this report are inherently complex and rely on assumptions, scenarios,
and forward-looking estimates, all of which involve material risks and uncertainty. Key judgements and estimates used in the
preparation of the climate and sustainability-related parts of this report are likely to change over time, and, when coupled with the
longer timeframes used in such disclosures, make any assessment of key topics inherently uncertain. The key areas involving
significant judgement or complexity include the assessment of climate and sustainability-related risk and the calculation of facilitated
emissions. There is a high risk that these assumptions or estimates may prove inaccurate.
Lack of common standards for classification.
There is currently no globally recognised or accepted, consistent and comparable standard or definition (legal, regulatory or otherwise)
of, nor widespread cross-market consensus as to what (i) constitutes ‘green’, ‘sustainable’, or similarly labelled activities, products, or
assets; or (ii) precise attributes are required for a particular activity, product or asset to be defined as ‘green’, or ‘sustainable’ or such
other equivalent label. Interpretations vary across markets and institutions, and while several initiatives are working toward
harmonisation, a consistent, comparable, and widely accepted framework has yet to emerge. Therefore, users of this report must not
assume that NWM N.V. Group’s reporting or description of activities, products or assets will meet those users’ past, present or future
expectations or requirements for describing or classifying funding, financing and facilitation activities as ‘green’, or ‘sustainable’ or
attributing similar labels (unless a definition or standard is specified in this report).
Variation of climate and sustainability-related reporting standards.
Climate and sustainability-related reporting standards continue to develop. While internationally recognised standards have been
developed, there is no universal standard accepted for institutions like NWM N.V. Group to fully align with and those that exist remain
subject to refinement and jurisdictional adoption.
Immature systems and controls.
Climate and sustainability-related reporting is less mature than traditional financial reporting. Non-financial reporting systems are less
developed than financial reporting systems, often involving manual processes and less robust controls, which may affect data quality
and consistency.
Please also refer to the ‘Climate and sustainability-related risk factors’ on pages 143 to 146 of this report and the cautionary
statement in the section entitled ‘Caution about climate-related metrics and data required for climate reporting’ on pages 70 -72 of
the NatWest Group plc 2025 Climate Transition Plan Report published by NatWest Group plc for the consolidated group, including
NatWest Markets N.V.
Caution on climate and sustainability-related metrics.
The processes we have adopted to define, collect and report data on our climate and sustainability-related performance, as well as the
associated metrics and disclosures in this document, are not subject to the same formal processes adopted for financial reporting in
accordance with established reporting standards. They involve a higher degree of judgement, assumptions and estimates, including in
relation to the classification of climate and sustainability-related (including social, sustainability, sustainability-linked, green, climate and
transition) funding, financing and facilitation activities, than is required for our reporting of historical financial information prepared in
accordance with established reporting standards. As a result, climate and sustainability-related disclosures may be amended, updated
or restated over time. However, NWM N.V. Group does not undertake to restate prior disclosures except where required by applicable
law or regulation, even if subsequently available data or methodologies differ from those used at the time of the original disclosure.
Caution about sustainability-related funding, financing and facilitation.
Sustainability-related (including social, sustainability, sustainability-linked, green, climate, transition) funding, financing and facilitation
currently represents only a relatively small proportion of NWM N.V. Group’s overall funding, financing and facilitation activities.
Accordingly, disclosures relating sustainability-related funding, financing and facilitation should be read in the context of NWM N.V.
Group’s broader balance sheet, risk profile and funding, financing and facilitation activities, and should not be interpreted as indicative
of NWM N.V. Group’s overall funding, financing or facilitation strategy.