NatWest Group Plummets 4.5% Amid Regulatory Fears and QE Tax Proposals

Summary
• NWG slumps to $13.93, down 4.5% from $14.60 close
• IPPR proposes Thatcher-style QE tax on UK banks
• NatWest announces voting rights update amid volatility

NatWest Group (NWG) is under fire as shares plunge to a 13-month low, driven by a controversial policy proposal targeting bank profits from quantitative easing. The stock has swung between $13.70 and $13.98, reflecting investor anxiety over potential regulatory overhauls. With the UK’s autumn budget approaching, the Institute for Public Policy Research (IPPR) has reignited debates over taxpayer-funded bank windfalls, sending ripples through the financial sector.

QE Tax Proposal Sparks Bank Sector Panic
The immediate catalyst for NWG’s 4.5% drop is the IPPR’s proposal to levy a 'QE reserves income tax' on UK banks, modeled after Margaret Thatcher’s 1981 deposit tax. This policy aims to recoup £7-8 billion annually by taxing commercial banks’ profits from central bank reserves. The thinktank argues that rising interest rates since 2021 have doubled bank profits to £22 billion, with public funds subsidizing the Bank of England’s £22 billion annual losses on its QE program. The proposal has triggered a sector-wide selloff, with Lloyds and Barclays also down 3-4%, as investors fear regulatory intervention ahead of the autumn budget.

Regional Banks Reeling as JPMorgan Holds Steady
While JPMorgan Chase (JPM) remains resilient with a 0.11% intraday gain, regional banks like NWG face disproportionate pressure. The IPPR’s focus on UK banks—rather than global peers—has created a divergence in performance. Lloyds and Barclays, both UK-focused, have mirrored NWG’s decline, whereas U.S. regional banks like PNC and U.S. Bancorp remain insulated from the UK-specific regulatory risk. This highlights the vulnerability of UK banks to domestic policy shifts, contrasting with the more diversified exposure of their American counterparts.

Options and ETFs to Hedge the Regulatory Storm
• 200-day MA: 12.26 (well below current price)
• RSI: 57.24 (neutral zone)
• MACD: 0.297 (bullish divergence)
• Bollinger Bands: 13.68–15.70 (price near lower band)

Technical indicators suggest NWG is oversold but lacks immediate directional clarity. Key support lies at the 200-day MA ($12.26), with resistance at the 30-day MA ($14.81). A bearish breakout below $13.68 could accelerate the decline, while a rebound above $14.85 may signal short-term stabilization. The absence of a leveraged ETF complicates hedging, but options offer targeted exposure.

Top Option 1: NWG20250919P15
• Type: Put
• Strike: $15
• Expiry: 2025-09-19
• IV: 44.36% (high)
• Leverage: 10.72%
• Delta: -0.73 (deep in-the-money)
• Theta: -0.0093 (moderate decay)
• Gamma: 0.216 (high sensitivity)
• Turnover: 130 (liquid)

This put option offers aggressive downside protection. With a 44.36% implied volatility and high gamma, it amplifies gains if NWG breaks below $13.68. A 5% downside to $13.23 would yield a 113% payoff (max(0, 15 - 13.23) = $1.77).

Top Option 2: NWG20251121C15
• Type: Call
• Strike: $15
• Expiry: 2025-11-21
• IV: 33.64% (moderate)
• Leverage: 28.43%
• Delta: 0.35 (moderate)
• Theta: -0.0046 (slow decay)
• Gamma: 0.163 (responsive)
• Turnover: 441 (high liquidity)

This call balances risk and reward. With 33.64% IV and 28.43% leverage, it benefits from a rebound above $14.85. A 5% upside to $14.63 would yield a 37.18% payoff (max(0, 14.63 - 15) = $0).

Action Alert: Aggressive bears should prioritize NWG20250919P15 for short-term volatility, while cautious bulls may use NWG20251121C15 to capitalize on a potential bounce.

Backtest Natwest Group Stock Performance

Regulatory Uncertainty Demands Immediate Positioning
The regulatory crosshairs on UK banks are far from resolved, with the IPPR’s QE tax proposal likely to dominate the autumn budget debate. NWG’s technicals suggest a volatile near-term path, with key levels at $13.68 and $14.85 acting as critical decision points. Investors must act swiftly: short-side opportunities are strongest if the $13.68 support fails, while a break above $14.85 could signal a rebound. Meanwhile, JPMorgan’s 0.11% gain underscores the sector’s divergence, offering a safer alternative for those avoiding UK-specific risks. Watch for $13.68 breakdown or regulatory reaction.