Yesterday, I wrote at length about Dame Alison Rose’s departure from the Natwest Group.

Opinions in print and on air continued into the evening and into Thursday morning, July 27, 2023.

Rose loses government appointments

Christian Calgie, a Guido Fawkes alumnus who now writes for The Express, told us ‘Humiliated Alison Rose sacked from two major Downing Street roles’ (purple emphases mine):

The now-former CEO of NatWest has suffered yet more career setbacks this morning, as the Government confirms she’s been ditched as a top advisor.

Dame Alison Rose had been appointed to an Energy Efficiency Taskforce within the Net Zero department in February and as a member of the PM’s Business Council just last week.

The Express understands she’s now been let go from both positions.

A No. 10 spokesperson said: “Following her resignation as CEO of NatWest Group, the Government has confirmed that Dame Alison Rose is no longer a member of the Prime Minister’s Business Council.”

Separately, a spokesperson for the Department for Net Zero has told the Express: “Following the news overnight, the Secretary of State has asked Dame Alison Rose to step down from her roles as co-chair of the Energy Efficiency Taskforce and as a Member of the Net Zero Council and she has resigned” …

Just last week she was also pictured laughing with Rishi Sunak at Downing Street, where she had been invited as part of the launch of Rishi Sunak’s new Business Council to help “turbocharge economic growth”.

At the time, Dame Alison said: “Partnership between government and business is the cornerstone of a sustainable growth economy.”.

“That’s why I’m delighted to be part of the Prime Minister’s Business Council for 2023. Working together we can face into the nation’s challenges to unlock investment, drive enterprise, grasp the opportunity of climate transition and ultimately, help UK economy to thrive.”

Dame Alison’s fate appeared sealed late last night after both Rishi Sunak, Jeremy Hunt and multiple Cabinet Ministers let it be known they had either lost faith in her continuing in the role or had serious concerns …

Political pressure forced the NatWest board, which had only hours before declared confidence in their CEO, to reconvene, leading to her resignation in the early hours.

The Government should encourage her to give up her damehood. She does not deserve it.

Early on Thursday, The Times reported that Rose could receive a whopping year’s salary. Sadly, this will surprise no one:

Dame Alison Rose’s departure from NatWest was under fresh scrutiny last night after it emerged she may be in line for a multimillion-pound payoff.

The 54-year-old chief executive left her position at the Bank by “mutual consent” over the Nigel Farage debanking scandal. Her resignation was announced after a late-night board meeting, convened when Downing Street, the chancellor and other senior cabinet ministers put pressure on her to quit.

Analysts said the fact that Rose had agreed with the board to leave with immediate effect suggested she would receive pay in lieu of working notice. NatWest’s annual report indicates that the bank can make a payment in lieu of 12 months’ notice, signalling that she is in line to receive a year’s salary.

Rose’s pay package last year was £5.25 million, which included a £1.1 million base salary and the same amount again in shares, as well as an annual bonus and performance-related stock awards. NatWest had indicated that it would look to curb parts of Rose’s pay after she admitted leaking confidential information about Farage to the BBC.

NatWest declined to comment on her payoff, but sources said its stance remained the same, suggesting the bank would look to limit her remuneration.

Farage told The Times: “She should not be getting a payoff at all. She has breached the most basic rule of banking and brought the NatWest group into disrepute. It’s a reward for failure.”

My concerns are a) what will she do next and b) how soon will she take up another job? If I were a NatWest decision maker, I would put in writing that she cannot work for twelve months. If she does, she would have to return the payout they gave her. (Personally, I don’t think she should get anything, but the world doesn’t work the way it should.)

These were the final hours before her resignation early on Wednesday:

An hour-long virtual meeting between board members ended the 31-year NatWest career of Dame Alison Rose.

The hastily convened 10pm conference came less than five hours after Sir Howard Davies, the NatWest group chairman, had pledged the board’s “full support” to its beleaguered chief executive. But the members decided she had to go and released a statement, with words from both Davies and Rose, confirming the news at 1.29am …

The final blow was the revelation that Rishi Sunak, the prime minister, and Jeremy Hunt, the chancellor, had significant concerns about her remaining in her job. Behind the scenes there was a flurry of calls between senior government officials and the bank to relay a similar message.

Andrew Griffith, City minister, pressed on the late-night exchange of views, said: “There’s always a dialogue between typically Treasury officials and senior people in all of the big major banks. The prime minister and the chancellor have been clear throughout about the principle at stake here, which is that nobody should have their bank account removed as a result of something they’ve said or something that they believe in.”

When questioned over whether he had put in a call to NatWest, Griffith added: “I’m not going to comment on individual conversations that may have happened over the last 24 hours.” He said it was right that Rose had stepped down.

The political fallout from the earlier statement had prompted the NatWest board to reconvene. Then came the early morning U-turn confirmation.

The 1.29am statement said that Rose had agreed to step down by mutual consent and appointed Paul Thwaite, CEO of the bank’s commercial and institutional business, to take over.

[NatWest chairman Sir Howard] Davies, still defending his colleague, said: “It is a sad moment. She has dedicated all her working life so far to NatWest and will leave many colleagues who respect and admire her.”

More about him below.

On Wednesday, British banks were read the riot act by City Minister Andrew Griffith MP:

Leaders from Britain’s biggest banks admitted yesterday that the Farage debanking fiasco had tarnished the sector’s reputation with the public as they were hauled into a meeting with the City minister, Andrew Griffith. Griffith told banking chiefs, including those from NatWest, HSBC, Lloyds, Barclays and Nationwide, that the idea a customer could be debanked over their views was “wholly unacceptable”.

Also:

The Information Commissioner’s Office has announced an investigation into whether any rules were broken. NatWest shares fell 3.7 per cent yesterday.

The Telegraph had more on the Information Commissioner’s Office in ‘NatWest may have broken the law over Farage Coutts scandal’:

On Wednesday, senior Conservative MPs demanded that Dame Alison forgo any severance pay. The bank declined to say whether she will receive an exit package.

John Edwards, the information commissioner, said on Wednesday: “The banking duty of confidentiality is over a hundred years old, and it is clear that it would not permit the discussion of a customer’s personal information with the media.

“We trust banks with our money and with our personal information. Any suggestion that this trust has been betrayed will be concerning for a bank’s customers, and for regulators like myself.”

The ICO said that if the bank could not resolve a complaint made by Mr Farage, it would begin its own inquiries.

Mr Edwards warned banks against holding excessive information on their customers after The Telegraph revealed NatWest had accumulated a 40-page dossier on Mr Farage to feed back to its Wealth Reputational Risk Committee. That dossier could be in breach of data protection rules …

The ICO can bring criminal prosecutions, although it is more likely that NatWest would face a civil penalty, sources said.

It can issue fines of up to four per cent of a company’s worldwide turnover, which in the case of NatWest could run into hundreds of millions of pounds.

GB News reaction

Nigel Farage devoted the bulk of his show to Wednesday’s developments:

While Farage was happy that Rose resigned, he said in his editorial that Sir Howard Davies and the board of directors should also stand down. He also said that he would be developing a website dedicated to people who have had their bank accounts closed for no good reason. Former Chancellor Kwasi Kwarteng was Farage’s first guest. Kwarteng said that banks’ targeting of individuals and closing their accounts is something new and he was not aware of it until recently, especially with small businesses. He was grateful that Farage is shining a light on this parlous business practice. Conservative MP Royston Smith was the next guest. He said that TSB had closed his account a year ago for no apparent reason then had the affrontery to send him a cheque for the balance. He had nowhere to cash it, so he tried to contact the bank to no avail. It was only when he tweeted recently about his situation that TSB finally contacted him. The situation is still unresolved.

Afterwards came a vox pop. GB News had interviewed people working in the City of London, the financial centre. The verdict was about 50/50 on Rose’s resignation. Some, including a lot of Europeans, said that it was an overreaction. Britons, however, by and large, said it was the right thing to do. Labour MP Lloyd Russell-Moyle, not a natural fit with Farage, appeared next. His name has not helped people with whom he has been associated. A charity reluctantly told him he could not be associated with them because he is too controversial, or so their bank thought, and his lodgers (renters) have had the same experience with their banks, one of which was Santander. He will support Farage’s quest to stop this happening.

Countess Alexandra Tolstoy came on next. I discussed her case in my July 12 post, and she related much the same to Farage. Here again, NatWest was the culprit. The Times featured her story today, Thursday, July 27. Farage’s last segment concerned the mysterious case of a bank branch in Reading, Berkshire, found guilty of mishandling loans to medium-sized businesses. The bank in question, HBOS owned by Lloyds, agreed to lend them money. Once a company had spent the money, the bank would call in the loan, forcing the company to go bankrupt. The bank then got the assets of that company and made millions. This happened during David Cameron’s and Theresa May’s premierships. A cabinet secretary said he would look into it and then said he had been advised not to talk to former Thames Valley Police and Crime Commissioner Anthony Stansfeld who had raised the issue with him. Stansfeld told Farage this scam was well into the hundreds of millions of pounds. The Prime Ministers did not want to know. The network also involved other banks in other cities, but their police forces ignored the story. Stansfeld said it took three years to solve the case, held before a jury, and put things to right thanks to the chief constable. It seems part of this investigation is still ongoing in Bristol, where Lloyds says it is still investigating, but, for now, denies any wrongdoing.

Jacob Rees-Mogg was next:

The discussion about Farage’s bank account started at the 20:21 mark. Rees-Mogg said that taxpayers lost £325m that day on Rose’s resignation. A former Coutts employee, Oliver Lewis was a guest. He had left the bank to write a biography of George Orwell, oddly enough. Lewis left in 2015 when Rose was appointed the head of wealth management. He was amazed to find out that all this had happened, because she was so professional and diplomatic.

Toby Young of the Free Speech Union took issue with the Financial Conduct Authority (FCA) complaining about the Government urging Rose’s resignation. This is because Farage had no due process; Coutts’s decision, Young said, was overridden by ideology. Oliver Lewis said that he used to write meeting minutes but never would have written Farage’s report in such a brusque way with so many accusations. Conversation then turned to Brexit Derangement Syndrome — Rees-Mogg’s words — about Nigel and Boris Johnson. Toby Young said that unwarrented bank account closures could happen to anyone. He praised Keir Starmer for finally condemning Coutts’s conduct in this affair. Rees-Mogg wondered what would happen if former Labour leader Jeremy Corbyn had been debanked.

All hoped that banking would return to normal soon. Lewis said that banking at NatWest is not 100% commercial because of the government bailout after the 2008 banking crisis — the taxpayer still owns 39% of the banking group — but also because government basically guarantees banking rights, at least in principle.

Dan Wootton devoted two segments to the Farage farrago.

In his editorial, he said it is important that people continue to speak up about it, otherwise we will be walking into enforced personal silence and control. He said that the criticisms of GB News are actually criticisms of the majority of the British people. Like Trump was for many Americans, GB News was ‘only in the way’. The people are the target:

Wootton also spoke with The Telegraph‘s Celia Walden — Mrs Piers Morgan — who finds the situation appalling. She thinks our banks’ social policy practices came over from the United States:

On Thursday morning, Spiked‘s Fraser Myers told the channel’s Breakfast show that Coutts probably thought it was doing its notional duty by closing Farage’s account, which, he said, was ‘a scary thing’:

What this mean for the future of ESG?

On Thursday, The Times posted ‘What does the Farage v Coutts row mean for ESG?’

Opinions in the legal world are divided, but law firms and other businesses have been moving towards ESG in recent years:

For some commentators it was only a matter of time that unbridled enthusiasm for the creation of standards for ethical corporate behaviour backfired. Even at the end of 2021 litigation was emerging around ESG that involved arguments over the boundaries of liability.

Nonetheless, the ESG bandwagon has continued to collect passengers, including many prominent law firms. In February the Anglo-US law firm DLA Piper was placed top of an inaugural ESG league table for the legal profession compiled by Impactvise, a consultancy that specialises in corporate ethics. The consultancy, which is based in Switzerland, was founded by two lawyers: Yannick Hausmann and Adrian Peyer, both of whom had worked at Zurich Insurance.

Impactvise certainly talks the ESG talk, saying that “legal service providers — particularly, lawyers at law firms and in-house corporate counsels — are key players in the modern value chain, and have a unique position to support the move towards a sustainable future”. But with rumblings that Farage could take legal action against Coutts over its approach to him and his account, many law firms may be having second thoughts about how closely they want to stand next to their clients’ ESG schemes, or indeed whether they should have their own.

Jean-Pierre Douglas-Henry, the managing director of sustainability and resilience at DLA Piper, acknowledges the conundrum. He says: “Businesses are increasingly being asked by policymakers to be aware of the impact of sustainability issues such as climate change and biodiversity loss.

“In some countries businesses are being required by law to factor these risks into their operations at every level, while in others they are just waking up to the risks involved.”

Others argue that it is wrong to label Farage’s row with Coutts as having its roots in the ESG movement. “The issue in the Farage case is that a risk-based decision about a politically exposed person had nothing at all to do with ESG and corporate values . . . and yet Coutts appears to have conflated the two things,” says Michael Evans, a former head of communications at Baker McKenzie in London and now a director at Byfield, a litigation and reputation consultancy.

Evans argues that Coutts’s risk committee was “very selective in identifying Farage as posing a reputational risk to the bank and its inclusive values when you look at some of its other current and former clients. In dropping Farage as a client, this was an example of virtue signalling gone too far by Coutts” …

The Coutts case is also interesting because of Farage’s use of a subject access request under freedom of information law to get a report from Coutts’s reputational risk committee used to justify the closure. Tony Williams, a former Clifford Chance managing partner who is now the director of the legal profession consultancy Jomati, says that the use of that facility represents a “ticking time bomb that many organisations may have if they prepare profiles of their customers”.

Williams speculates that law firms “will become rather more circumspect as to certain clients they act for, but inevitably will make some commercial decisions and recognise the reality that if every client was perfect they probably wouldn’t need lawyers very much”.

As to whether the Farage-Coutts saga will hole ESG below the waterline, Evans is doubtful. “That is not to say the anti-ESG backlash isn’t real, but the legal sector’s view to date has very much been that a firm must have its own house in order so that they can be taken seriously by big corporate clients grappling with ESG-related issues,” he says. “This view seems unlikely to change any time soon.”

Ben Marlow, The Telegraph‘s chief City commentator, says ‘The NatWest debacle exposes the bone-headedness of corporate moralising’:

There needs to be a thorough rethink of the bank’s pious posing and how its devotion to the corporate “purpose” movement led it to make such a series of terrible decisions.

The bone-headedness of corporate moralising is as much to blame for this debacle as the poor judgement of senior executives. Indeed, it is hard to imagine that the bank would ever have picked a fight with the former UKIP leader in the first place if it hadn’t well and truly disappeared down a rabbit hole of hypocrisy.

This is an organisation that harps on endlessly about diversity and inclusion, yet went to great lengths to come up with reasons to dissolve its relationship with one person on the basis that his personal views didn’t fit with their interpretation of the world. What could be less inclusive than that?

As Farage correctly points out, the problem with so much of the Ethical, Social and Governance (ESG) fanaticism that companies have been captured by is that our values and the politics that underpin them are, erm, diverse.

And because ESG is essentially an ideological leap of faith, its most committed proponents struggle to accept anyone challenging their stance.

The experience of Reverend Richard Fothergill is no less troubling than Farage’s. The clergyman was allegedly de-banked by Yorkshire Building Society after 17 years as an account holder for asking its customer services department whether promotion of LGBT causes was a good use of its time …

Banks have turned contempt into an art form and suspicions of profiteering during a cost of living crunch are hard to avoid. Customers want rip-off charges to end, and fairer savings rates, particularly when they’ve suddenly found themselves on a mortgage that is no longer even remotely affordable …

If NatWest is to recover quickly from this damaging episode it needs to abandon the moral crusade and rediscover – yet again – the old-fashioned and boring business of being a bank.

On Thursday morning, The Telegraph reported that NatWest and Barclays received the most complaints about account closures:

NatWest was the subject of the joint most complaints over decisions to close bank accounts last year, data show, a day after its boss resigned following a scandal over the closure of Nigel Farage’s Coutts account.

Customers complained about NatWest and rival Barclays 274 times each in 2022/23, figures supplied to Bloomberg showed. This includes cases linked to NatWest’s Royal Bank of Scotland brand.

The data from the Financial Ombudsman Service, the independent body that settles issues between customers and lenders, show NatWest was the most complained-about bank for the past three years in terms of account closures, although the absolute number for all the lenders is a fraction of the millions of accounts they each service.

It comes after Dame Alison Rose resigned on Wednesday after discussing Mr Farage’s account with a BBC journalist, wiping £850m off the value of the lender.

Should the NatWest board go?

It isn’t just Nigel Farage saying that Sir Howard Davies and NatWest’s board of directors should go.

On Thursday, The Times posted ‘Investor’s ire at “appalling” bank board’:

In a blistering broadside, Martin Walker, head of UK equities at Invesco, a NatWest shareholder, said, “there is clearly a problem in this business with governance.

“Frankly, I am appalled at both management and board behaviour in this whole episode. NatWest is a good business that has many strengths and when the governance isn’t robust within a business, then those strengths will never be reflected in the share price.”

Walker’s intervention increases the pressure on Sir Howard Davies, the bank’s chairman, who already faces scrutiny over the chaotic departure of Rose, the lender’s chief executive …

“Her role was clearly untenable,” Walker said. “You have to call into question the judgment of the board here” …

Walker said the Farage affair raised concerns beyond Rose’s departure. Invesco owns a stake in NatWest worth about £128 million, a portion of which is managed by Walker.

Davies, apparently, was already scheduled to leave NatWest:

A source at the bank insisted that Davies, who was already due to step down by the middle of next year, had “absolutely engaged” with the government. NatWest shares fell by 9½p, or 3.7 per cent, to close at 241¾p yesterday as investors digested the developments.

Alistair Osborne, one of The Times‘s business columnists, predicts ‘NatWest clearout looms after Farage fiasco’:

The taxpayer owns 39 per cent of NatWest, the continuing legacy of 2008’s £45.5 billion bailout in the lender’s previous guise as Royal Bank of Scotland. So didn’t Davies check whether the board’s contentious backing of Rose had the support of No 10 and No 11? Apparently he did speak to senior individuals in the Treasury more than once in the 24 hours before Tuesday’s 5.45pm announcement. But there must have been some horribly crossed wires.

No sooner was the bank’s ludicrous statement out than The Times found the chancellor, Jeremy Hunt, had significant concerns. Ditto three other cabinet ministers. One delivered some home truths: that Rose has “no integrity”, the chairman has “lost his credibility” and “the whole board has got to go if it wants to defend her”.

The upshot? A screeching U-turn at 1.30am with Rose going by “mutual consent”, replaced for an initial 12 months by commercial chief Paul Thwaite. Davies called it a “sad moment”. It is for the contrite boss, who’d worked for the bank for more than 30 years and whose as-yet undisclosed payoff may still stoke fresh controversy. But, with the Financial Conduct Authority and Information Commissioner’s Office poking around, a row over debanking clients and Rishi Sunak and Keir Starmer agreeing she had to go, her position was untenable. The shares fell 3.7 per cent to 241¾p.

As for Davies, who’s on his way out anyway, his judgment has proved a throwback to the days when, as director of the London School of Economics, he accepted a £300,000 donation from a foundation run by Colonel Gaddafi’s son. The rest of the board — mainly a bunch of bankers, including Mark Seligman, ex of Credit Suisse, as the senior independent director — have also shown themselves incapable of governing a bank. Farage reckons they should all go. Again, he’s right. After this fiasco, a clearout looms.

Alistair Osborne’s colleagues, Dominic O’Connell and Emma Duncan, gave their views in ‘Fiasco in the boardroom: Times writers’ verdicts on Alison Rose’s resignation’.

Dominic O’Connell says:

given what has happened with Rose a wider shake-up of the board is likely.

Emma Duncan says in the aftermath of Rose’s resignation:

The question now is whether Sir Howard Davies, the bank’s chairman, will survive …

The Financial Conduct Authority has demanded an independent review of Rose’s actions, and says ominously that it “will decide if any further action is necessary”.

Davies, however, said that the board had “full confidence” in her. That was, frankly, bizarre.

The Times‘s view — the main editorial — also points the finger at Coutts’s chief Peter Flavel, who has managed to keep an exceedingly low profile throughout all of this:

Also in the crosshairs for this debacle, together with the NatWest chairman, Sir Howard Davies, is Peter Flavel, head of Coutts. His company profile lauds him for making the image of the inclusive-yet-exclusive cash warehouse “more warm and modern”.

GB News’s hedge fund owner makes fortune

And, finally, a GB News’s co-owner, who also owns the hedge fund Marshall Wace, made millions for the fund by betting against NatWest, The Telegraph reported on Wednesday:

GB News owner Sir Paul Marshall’s hedge fund has made a multi-million pound gain on its bet against NatWest shares following the exit of Dame Alison Rose.

Regulatory filings show that Marshall Wace has the biggest short position in the lender’s shares meaning it stands to gain from falls in the bank’s market price.

The fund netted paper gains of around £5m on Wednesday after NatWest’s share price slumped more than 3.7pc after the departure of its chief executive Dame Alison Rose, which wiped more than £850m off the value of the lender. 

While the gain represents a tiny sum relative to Marshall Wace’s more than $60bn in assets under management, it may give Sir Paul extra satisfaction given his stance against “woke” business culture …

Sir Paul, whose son Winston was a member of the band Mumford and Sons, has been a prominent backer of Brexit, calling it “a huge opportunity for the UK”.

Ahh, that explains why Winston is a regular GB News guest.

This bet was computer-driven and placed before the Farage farrago:

The hedge fund has software it calls TOPS (Trade Optimised Portfolio System), which analyses the views of analysts and economists and gives indications where to invest.

Marshall Wace first disclosed that it was building a short position against NatWest in March, when fears were growing over the health of the global financial system following the collapses of Silicon Valley Bank and Credit Suisse. 

At the start of last month it had borrowed 0.8pc of the shares to profit from price falls, but has since trimmed the bet to 0.59pc, according to data from the Financial Conduct Authority.

Last year, alongside Legatum, a Dubai-based group founded by the billionaire Christopher Chandler, he bought out the US entertainment giant Warner Bros. Discovery and GB News co-founders Andrew Cole and Mark Schneider of their stake in the news network.

Last year, Sir Paul shared a pot of more than £720m with a group of 23 partners after his London-based hedge fund posted a surge in profits.

Marshall Wace declined to comment.

Another update will come in due course.