Some fifteen years have passed since the Great Financial Crisis and at times it seems that NatWest has been active on the ground.
Despite a series of major panjandrums on the chair of the chairman and four CEOs (without Fred Goodwin), the bank’s board is shot, the share price plummets and the government is stuck with a 38.6 percent stake.
That may seem unimportant, but with a Labor government around the corner there must be a risk of NatWest being submerged into a more political role.
The contrast between NatWest and the titans of Wall Street since the financial crisis could not be starker. The US government has taken stakes in most major lenders. The assets were degorized within months.
NatWest, the former Royal Bank of Scotland, threw away assets and curtailed its international ambitions like there was no tomorrow.
Running on the spot: the bank’s board is shot, the share price plummets and the government is stuck with a 38.6 percent stake
In contrast, JP Morgan Chase bailed out investment bank Bear Stearns, retail chain Washington Mutual and most recently Silicon Valley lender First Republic.
During one of the most challenging periods in global finance, it has had one boss: Jamie Dimon. Just this week, investment bank Morgan Stanley announced it would change CEOs, with insider James Pick succeeding Aussie-American James Gorman, 65, after 14 years.
One would hope that if anyone could stabilize NatWest it would be the combination of chairman Sir Howard Davis, with unparalleled regulatory experience, and Alison Rose with her intense focus on customers and doing the right thing.
The full story of the poor performance following the cancellation of Nigel Farage’s account at the posh and woke Coutts offshoot was exposed by the Information Commissioner.
NatWest’s decision to engage law firm Travers Smith to investigate the circumstances surrounding the Farage bank account closure was an attempt to shut down public debate. Even though the Financial Conduct Authority has chosen in a statement to describe its report as ‘independent’ when the paymasters were NatWest, and that is a moot point.
The purpose of such internally appointed investigations is to plow the field, making it more difficult for regulators to do their job. We can be grateful that in this case the Information Commissioner got to the heart of the issue before the lame Travers Smith study was published.
NatWest is to be commended for making the report available rather than keeping it under lock and key.
Nevertheless, the review is impressive, arguing that the decision to delete Farage’s account was “primarily commercial and therefore legal.”
Readers of the internal Coutts documents, which discredit Farage for racism, sexism and xenophobia, would come to a different conclusion. While Farage’s finances may have fallen below the requirements for new customers, you might have expected the private bank to have shown some forbearance to an existing customer.
Rose made an unforgivable mistake by sharing confidential information with an experienced and highly respected BBC journalist over dinner. When the reporter received confirmation the next day, in accordance with best practices. Rose takes solace in the Travers Smith report, largely because it delivers the hard knocks. The disclosure may have been unintentional, but the confirmation was not.
The defense that the ‘impact’ surrounding Farage’s revelation was ‘minimal’ is an argument without merit. If a politician’s personal financial information were to leak, customers from the largest corporations to the sole proprietorship could no longer trust that their privacy would remain intact.
Rose distances herself from Coutts’ assessment of Farage, describing it as ‘very unpleasant’. But there is no hint of apology for the damage it has caused to Coutts, NatWest and all its stakeholders.
A combination of Travers Smith’s release and lowered prospects for the bank sent shares tumbling.
Rose clearly does not want to say anything that could come between her and a contractual payout of up to £11 million, made up of her salary and share options. There are legal and moral arguments for the bank to recover some of this excessive amount.
Rose prided herself on doing the right thing and turning Gogarburn’s headquarters outside Edinburgh into a food bank. Taking money from shareholders, including taxpayers, would be unconscionable in a cost-of-living crisis.