Howard Davies has apologised for the uncertainty created by recent events but insisted that “My intention is to continue to lead the board”.
Speaking to reporters this morning, Davies says NatWest’s board met yesterday and agreed to the terms of reference for an independent review into the handling of Nigel Farage’s accounts at Coutts.
This review will examine the way in which information about that issue has been handled within the bank. The terms of reference of that review will be released today and the finding will be released “in due course”, says Davies.
He adds:
“My intention is to continue to lead the board and ensure that the bank remains sound and stable and able to support our 19 million customers”.
In April, Davies said he planned to step down as NatWest’s chair by July 2024.
Earlier this week, Farage called for all NatWest’s board to go, after it released a statement backing Rose, hours before her resignation.
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While indiscretion may have led to her departure, the latest results from NatWest suggest former CEO Alison Rose was making “a decent fist of her day job”, says Russ Mould, investment director at AJ Bell.
Moult says:
“After years of struggle following its forced nationalisation during the 2007/8 financial crisis, Rose had probably got the bank as close to normality as any of her predecessors and there will be real frustration that NatWestis back in crisis mode, undoing much of that good work.
This is not an unblemished update. The trimming of guidance on the company’s net interest margin hints at the problems for banks, under big political and regulatory pressure, of charging more to borrowers without offering more to savers too, particularly with mounting competition in the savings market.
And, while earnings beat expectations, this reflected several one-off items and did not reveal too much about the underlying performance of the bank.
The scandal over confidentiality and the way it has played out is a reminder to other investors that the Government remains a major shareholder and, as such, has real influence on the way the bank is run. This is not a reminder the market is likely to receive positively.
While bad debts remain under control for now, the pressures on UK households are acute and this remains an issue which could flare-up for NatWest and the other banks.
NatWest’s share are ralling this morning, recovering some of their losses from earlier this week.
They’re up 1.75% at 244p, after the bank beat profit forecasts and announced a £500m share buyback this morning.
NatWest has appointed law firm Travers Smith to independently probe its handling of the Farage affair, our City editor Anna Isaac explains.
This review will have three aims: to check how Farage’s accounts at private bank Coutts were closed; why they were shut down; and how such a controversial set of statements about his political views and actions were compiled.
It will also look at how the bank communicated with him about his accounts at the bank and their closure.
The investigation is also set to examine the “timing and content” of updates about Farage’s accounts from Coutts to Natwest group level - suggesting this could include memos or briefings from former chief executive Peter Flavel to ex-group boss Dame Alison Rose.
One of its more sensitive tasks will be to put a spotlight on the circumstances and nature of any leaks to the press, and what confidential information may have been passed from the banking group to the media, including the BBC.
Beyond the handling of Farage’s accounts, the probe will also look at all accounts closed at Coutts over the past 24 months. It will follow a similar approach as with the Farage-specific investigation: looking at questions of how and why accounts were shut, and what was said to all other customers whose accounts were shut down.
Howard Davies ended his call with journalists about this morning’s results by insisting that this morning’s results are “positive” (Natwest posted a rise in profits to £3.6bn for the first half of the year).
People will want to look at its ‘net interest margin’, after NatWest cut its guidance on this profitability measure this morning (see earlier post), Davies predicts.
But, he says, “the bank is in a good financial condition”, insisting:
We have not seen deposit outflows or customer outflows on any scale which concerns us.
And the NatWest chair insists that business continues as normal.
Davies signs off by saying that Natwest is open for business for its customers, explaining:
I want to end where I began by reassuring our customers, and our shareholders, that the business of this bank is continuing as normal and will do because it’s crucial from the British economy point of view and for the 19 million customers we serve, that they know that, in spite of all this, we are open for business and ready to serve them.
NatWest is also asked about Alison Rose’s exit pay, following reports that she could receive a ‘multi-million-pound pay-off’.
Howard Davies says he can’t say precisely when details of the package will be published, explaining:
The independent review will take place and then we’ll have to consider it.
Davies adds that he doesn’t see a reaon to depart from the normal practice of reporting executive pay.
He also explained, earlier in the call, that decisions on Rose’s pay can’t be made until the independent review has been completed.
Howard Davies is then asked whether there is merit in him leaving early to draw a line under crisis, or whether it’s right to wait.
Davies replies that a search for a replacement chair is underway – but insists this is a completely planned process [reminder: he said in April he would leave by July 2024].
Davies says that his assessment, which was supported a day or two ago by the economic secretary, is to let that process continue.
That is a sensible position, Davies insists, as it maximises the chances of finding a good successor who can take NatWest forward.
And with regards to the Financial Conduct Authority’s involvement on the Farage bank account debacle, Howard Davies confirms the regulator have raised concerns with the bank.
With regard to account closures, these issues should be independently reviewed; we can certainly assure that will happen, Davies adds.
Davies says NatWest’s independent review into the closure of Nigel Farage’s Coutts account will have three dimensions.
It will cover: the decision to close the accounts of Mr Farage; the circumstances around the BBC article (which initially said it was a commercial decision); and to review other Coutts account closures.
Onto the appointment of Paul Thwaite as NatWest’s CEO earlier this week to succeed Alison Rose.
Howard Davies says the bank always has an emergency plan ready for unexpected departure.
This plan was considered a few months ago, and NatWest decided Thwaite was the right person to be emergency successor.
This was discussed with Paul himself, Howard Davies says; Thwaite obviously wasn’t expecting this to happen, but was prepared to take the role on.
This position was also discussed with regulators, Davies adds, as they would expect a bank to have a succession plan in place.
Howard Davies is also being grilled about when he found out about the bank’s discussion with the BBC about Nigel Farage.
He explains that during the course of the last week the story began to develop that BBC business editor Simon Jack’s piece had been sourced within the bank.
This was discussed with Alison Rose, and the board felt it needed to have a clear statement from her about what said in that conversation. The board then met on Monday to discuss it [it was released on Tuesday afternoon].
When asked whether Farage’s accounts at Coutts had been reinstated, Howard Davies says it is “not appropriate for me to speak about the state of his accounts”.
NatWest chair Howard Davies says the political reaction to the decision to retain Alison Rose as CEO on Tuesday night meant her position was untenable (prompting her resignation around 1.30am Wednesday morning).
He told reporters:
We took the view on Tuesday that even though mistakes had been made, it was on balance right to retain Alison Rose as our CEO.
But the reaction was such as to convince her and the board that her position was untenable.
Davies added that:
I clearly regret the way things have turned out. We’ve lost a great leader as a result, but I now have to look forward.
Davies added that the board was “unanimous at all points” (both the initial decision to support Rose, and the later u-turn that she would resign).
Howard Davies has apologised for the uncertainty created by recent events but insisted that “My intention is to continue to lead the board”.
Speaking to reporters this morning, Davies says NatWest’s board met yesterday and agreed to the terms of reference for an independent review into the handling of Nigel Farage’s accounts at Coutts.
This review will examine the way in which information about that issue has been handled within the bank. The terms of reference of that review will be released today and the finding will be released “in due course”, says Davies.
He adds:
“My intention is to continue to lead the board and ensure that the bank remains sound and stable and able to support our 19 million customers”.
In April, Davies said he planned to step down as NatWest’s chair by July 2024.
Earlier this week, Farage called for all NatWest’s board to go, after it released a statement backing Rose, hours before her resignation.
NatWest CEO Alison Rose’s resignation this week was a “pretty heavy price to pay for an error of judgment”, said Bill Winters, chief executive at Standard Chartered, the emerging markets-focused bank.
Speaking during an earnings call this morning, Winters said Rose’s apology should be accepted and it would be “surprising” if a reform to step up regulatory oversight in this area was needed, Reuters reports.
https://news.google.com/rss/articles/CBMidWh0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy9saXZlLzIwMjMvanVsLzI4L25hdHdlc3QtcHJvZml0cy1mYXJhZ2UtYmFuay1hY2NvdW50LWhvd2FyZC1kYXZpZXMtYnVzaW5lc3MtbGl2ZdIBdWh0dHBzOi8vYW1wLnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy9saXZlLzIwMjMvanVsLzI4L25hdHdlc3QtcHJvZml0cy1mYXJhZ2UtYmFuay1hY2NvdW50LWhvd2FyZC1kYXZpZXMtYnVzaW5lc3MtbGl2ZQ?oc=5
2023-07-28 08:54:43Z
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