NatWest Markets' chief executive Martin Owen resigned yesterday as part of a wide-ranging review of the troubled investment bank. Following the discovery earlier this year of a GBP90 million (about HK$1.13 billion) loss from mis-priced interest rate options, NatWest Bank has been scrutinising NatWest Markets' development strategy, and a report is due at the end of the month. Yesterday it said the losses, built up since the end of 1994, had had a 'knock-on effect at the profits at NatWest Markets'. Even after the GBP77 million net charge set aside to cover the losses, NatWest yesterday said it expected first half profits to be 'significantly lower' than last year. NatWest has also faced problems in Hong Kong. Last November it bought out its disastrous link-up with Wheelock, blaming its decision on a clash of cultures between the two companies. Since then it has been building up a stronger Asian equities trading and corporate finance arm and recently scoring a coup by making Beijing Datang Power Generation the first London-listed China enterprise. Yesterday, NatWest shares fell almost 5 per cent to 757.5 pence in reaction to Mr Owen's resignation, and a warning that company profits will not be more than GBP770 million in the first half. Derek Wanless, chief executive of NatWest Bank, will take Mr Owen's place until a new chief executive is appointed. Mr Wanless will continue the review started by Mr Owen, and will look at how to improve controls and risk management. 'NatWest Markets must have strong leadership, a clear strategy, the best people and a robust control environment,' he said. 'Our focus will be on areas where we have a competitive advantage, and a strong product base and high-quality people, deploying capital in those investment banking activities where better returns can be achieved,' he added. Mr Wanless is also concerned over the apparent failure of NatWest Markets to make the same impact on investment banking as its rivals. Last year, NatWest Markets embarked on a busy acquisition trail, spending GBP477 million on the British-based fund management group Gartmore, US$590 million on US bond house Greenwich Capital, an undisclosed amount on the British corporate finance boutique Hambro Magan, and $135 million on the US corporate finance house Gleacher. None is expected to be sold, but the bank is thought likely to re-orient its strategy towards a lesser focus on investment banking and perhaps more on life insurance or fund management.