NatWest chairman cites political fallout of Farage storm as reason for CEO Rose’s departure

NatWest chairman cites political fallout of Farage storm as reason for CEO Rose's departure

NatWest CEO’s Departure: A Political Pressure Cooker

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LONDON, July 28 – The departure of chief executive Alison Rose from NatWest (NWG.L) has sent shockwaves throughout the banking industry. The catalyst? A damaging clash with former Brexit party leader Nigel Farage. The incident not only brought political pressure to bear on the bank but also led to a series of high-profile resignations.

Mishandling Farage’s Accounts

NatWest, Britain’s largest business bank, has faced severe criticism for its mishandling of the closure of Nigel Farage’s accounts with its private bank Coutts. A leaked dossier showed that a bank committee had determined that Farage’s views did not align with the lender’s own. This decision caused a stir, leading to a series of events resulting in the departure of both CEO Alison Rose and Coutts CEO Peter Flavel.

Political Pressure and Untenable Positions

NatWest’s chairman, Howard Davies, confirmed that political pressure played a significant role in the board’s decision to let go of Alison Rose. Davies stated that the “political reaction” to the situation made Rose’s position “untenable.” This turn of events has taken a toll on the bank, with Davies lamenting the loss of a “great leader.”

A Taxpayer-Owned Bank

NatWest is currently almost 40% owned by the taxpayer, a legacy of its bailout during the 2008-2009 global financial crisis. Despite the government describing itself as an “arms-length” investor with no interference in commercial decisions, the exceptional circumstances surrounding the Farage incident saw its intervention seal Rose’s fate. Sources within the prime minister’s office and the finance ministry expressed their dissatisfaction with her remaining in her position, leading to her departure.

Shaky Ground for Davies

The fallout from the incident has also put NatWest’s chairman, Howard Davies, under pressure. Shareholders have expressed concern over his position, particularly after the board initially backed Alison Rose before her abrupt departure. However, Davies maintains that he intends to leave in 2024 as previously announced.

Independent Review and Earnings

NatWest announced that it has appointed the law firm Travers Smith to conduct an independent review of the account closure arrangements at Coutts. This move aims to address the mishandling of the Farage incident and prevent similar occurrences in the future.

Despite the controversy, NatWest’s financial performance remains solid. The bank reported a jump of over a third in first-half pre-tax profit to 3.6 billion pounds ($4.6 billion), surpassing analysts’ forecasts. In addition to this positive financial news, NatWest announced an interim dividend of 5.5 pence per share and a share buyback of up to 500 million pounds for the second half of the year.

However, the bank also cautioned that tightening mortgage margins and savers seeking better deals could impact its margins this year. To prepare for potential losses, NatWest set aside an additional 223 million pounds to cover soured loans.

In conclusion, the departure of NatWest’s CEO Alison Rose amid political pressure and backlash reveals the challenges faced by the banking industry. It underscores the delicate balance between commercial decisions and political scrutiny. As the bank moves forward, an independent review will shed light on the account closure mishap, providing valuable insights into preventing such incidents in the future. Despite the turbulence, NatWest’s impressive financial performance demonstrates resilience and a commitment to stability in challenging economic times.

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