NatWest chair defies calls to quit and blames ‘political pressure’ for CEO ousting
Top bosses to face scrutiny from shareholders after turmoil hits bank’s value
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Your support makes all the difference.Under-fire NatWest chairman Sir Howard Davies blamed “political pressure” from Downing Street for the ousting of chief executive Dame Alison Rose but insisted he would cling on to his job despite facing calls to quit as well.
As the bank reported a jump in profits despite turmoil at the top of the group, Sir Howard said he had “reflected” on his position but would continue to serve.
NatWest has been grappling with a crisis over the resignations of two chief executives over the leaking of details of Nigel Farage’s bank account.
It was dragged into an embarrassing row when Mr Farage revealed that his account with private bank Coutts, owned by the NatWest Group, was closed partly because of his political views.
The taxpayer-backed lender revealed an operating pre-tax profit of £3.6 billion for the latest half-year, up from £2.6 billion in the same period last year.
But senior bosses are set to face scrutiny from shareholders after the shock departure of NatWest chief executive Dame Alison wiped 3.6 per cent from the bank’s share price on Wednesday. It knocked £850m from NatWest’s value and hit taxpayer shares by more than £320m.
And on Thursday, the furore claimed a second bank boss’s scalp, when Peter Flavel, chief executive of upmarket bank Coutts, resigned over his role in the closure of the account of the former Ukip leader.
Mr Farage said that the banking sector was “making massive profits whilst treating the public badly”.
“The NatWest profits are no great surprise,” he said. “Interest payments have risen sharply yet deposits have lagged.”
Dame Alison apologised and admitted making a “serious error of judgment” when she discussed Mr Farage’s bank account with a BBC journalist.
The BBC News story had wrongly said the closure had been motivated by commercial reasons only, citing a “failure” by Mr Farage to meet a £1m borrowing requirement.
But Brexiteer Mr Farage presented a dossier showing his Coutts account had been closed partly due to his political views. Internal documents labelled him as “xenophobic and racist”.
Dame Alison later admitted she was the source of the BBC story.
Earlier this year, she received a substantial payout of more than £5m following robust profits – the first time NatWest had granted a bonus to a chief executive since the government’s rescue of the company during the 2008 financial crisis.
The departures of Dame Alison and Mr Flavel have piled pressure on Sir Howard, who initially expressed “full confidence” in Dame Alison.
Sir Howard, who has faced calls to quit, told reporters on Friday morning he has “reflected” on his position but decided to stay on as chairman of the bank.
“I serve at the behest of shareholders but will continue to do so because I think it is important there is some stability here,” he said.
He sought to clarify the reversal of the board’s stance on Dame Alison, having expressed “full confidence” in her as chief executive just hours before she was forced to quit.
The “political reaction” to the decision to keep Dame Alison in post meant her position was “untenable,” Sir Howard said. He added that in his eight years running the bank, the government has not interfered in commercial decisions, but said “these were very exceptional circumstances”.
“The government took a view which was not the view that the board had taken… we’ve lost a great leader as a result,” Sir Howard said.
He also confirmed NatWest has launched an independent review into the handling of Mr Farage’s Coutts account.
It has appointed law firm Travers Smith to lead the review into the account closure and how the information was handled. The review will also look at other account closures.
NatWest, which is 39 per cent-owned by British taxpayers, saw profits in the first half of the year jump by nearly £1 billion, beating forecasts as the banking group benefited from higher borrowing costs and greater lending.
Analysts had been expecting a lower profit of £3.3 billion for the latest half-year.
But the bank said it expects higher interest rates to be largely offset by savings rates and mortgage income reductions through the second half of the year.
NatWest finance boss Katie Murray said the bank’s performance in the first half of the year was “strong”.
“As a result, we are able to continue lending to our customers and delivering sustainable returns and distributions to our shareholders, even in the current uncertain economic environment,” she said.
And Ms Murray added: “Although arrears remain low, we know that people, families and businesses are anxious about their finances and many are really struggling.
“We are being proactive in our support for those who are hardest hit, helping to build the financial resilience of the customers and communities we serve."
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