NatWest boss Paul Thwaite has become the latest bank boss to warn Rachel Reeves against a tax raid on the City, saying: ‘Strong economies need strong banks.’

Thwaite made clear that he would rather use NatWest’s capital to make loans to boost growth ‘for the greater good of the country’.

He followed Lloyds chief executive Charlie Nunn in sounding the alarm over a tax hike on the sector as the Chancellor looks for funds to repair Britain’s deteriorating public finances.

And Thwaite said NatWest was also closely monitoring the impact of the government scrapping the non-dom tax regime – which is reported to be driving an exodus of wealth creators from the UK.

The comments came as the bank reported a better than expected 18 per cent rise in first half profit to £3.6billion – in its first set of results since returning to full private sector ownership following a state rescue during the financial crisis in 2008.

It also upgraded its profit guidance for the full year and announced a £750million share buyback.

Asked about a possible tax hike, Thwaite said: ‘Banking is a sector that really matters. Strong economies need strong banks, strong banks need strong economies.’

He pointed to the key role of NatWest in supporting the economy already, with one in eight UK mortgages and lending to one in four UK businesses.

‘What I want to do is use the bank’s capital to invest in the business but also to support customers. If we do that, that supports the wider UK growth agenda,’ he said.

Thwaite – who said the bank’s return to full private ownership has helped it attract new investors – added that it was ‘very important’ for them to see ‘consistency, stability and predictability’.

He added: ‘From that perspective it’s very important that policy makers are thoughtful about any signals that they send in respect of policy.

‘Ultimately I want to use the bank’s capital to support customers and help them grow for the greater good of the country.’

Thwaite also hailed a strong performance from its private bank Coutts which serves high net worth clients. 

He said the bank – which is UK-focused with some international clients – was not yet seeing ‘meaningful change in terms of behaviour’ due to the non-dom changes.

‘But that customer base is very alive to policy change be that tax or regulatory so we’re monitoring it very closely,’ he added.

On the wider economy, Thwaite pointed to ‘reassuring signals’ – with interest rates coming down, the housing market remaining resilient and households saving more – in the wake of tariff announcements and other global events earlier this year.

‘But I’m very mindful that there’s a degree of uncertainty that persists,’ he added.

Meanwhile, Thwaite refused to rule out the possibility that it might look for further takeover deals.

Last year it bought a £2.5billion mortgage portfolio from Metro Bank as well as a chunk of Sainsbury’s Bank assets and more recently was linked with TSB – though it was eventually bought by Santander.

Prior to that deal, NatWest was reported to have had its own £11billion bid for Santander UK rejected.

Thwaite said: ‘We will look at inorganic activity [takeovers] but given how well the core business is performing in terms of returns, it’s a very high bar both financially and operationally. The risk-reward has to be worth it and it needs to be genuinely compelling to shareholders.’