NatWest has taken a step towards boosting its presence in the US following changes to ring-fencing rules under former chancellor Rachel Reeves.
The US’s Federal Reserve said last week it had granted approval for the bank to set up a so-called “representative office” in Stamford, Connecticut.
The office would “act as a liaison with current and prospective US customers of the bank”, the Fed’s approval document read.
“It would promote and market the bank’s products and services, conduct customer service activities, and perform back-office functions.”
NatWest already has a broker-dealer based in Connecticut to support cross-border lending activity through its subsidiary NatWest Markets.
Permission to establish a representative office means its ring-fenced bank can proceed with growing its team in the US with a small number of relationship and credit employees to support existing and prospective customers.
It is understood that it will help to deepen relationships with large corporate and institutional customers who utilise the bank’s financial markets and lending products.
It does not enable NatWest to accept deposits, lend money or engage in any other banking activities.
The application for a representative office followed changes to the UK’s ring-fencing rules – which were brought in after the 2008 financial crisis to separate banks’ retail and investment banking activities, in order to protect customers.
Reforms under Ms Reeves removed restrictions on ring-fenced banks on building a physical presence outside of the European Economic Area, including the US.
Gary Greenwood, an equity analyst for Shore Capital, said in a research note: “While modest in scope, the proposed expansion represents an early reversal of the strategy pursued by NatWest since the global financial crisis, during which the group largely withdrew from international markets, including the US, to focus on its domestic franchise.”
He said the move, which is linked to ring-fencing reforms designed to give UK banks greater flexibility to compete in international markets, could “indicate a willingness by management to pursue growth opportunities outside the UK”.
“Whether this proves to be a sensible extension of the bank’s existing client offering or the first step towards a broader international expansion remains to be seen,” Mr Greenwood said.
NatWest declined to comment on the Fed’s approval.