LONDON — NatWest Group CEO Alison Rose resigned after a media storm over the termination of Brexit figurehead Nigel Farage’s bank account by sister lender Coutts.
Rose admitted Tuesday to having discussed the details of Farage’s account with a BBC reporter and having thus been the source of a controversial story for which the national broadcaster has since issued an apology.
Initially, the board reiterated its support for her to stay on as CEO, but at 2 a.m. London time Wednesday the bank announced her immediate departure by mutual consent.
In a statement, Rose said she remained “immensely proud of the progress the bank has made in supporting people, families and business across the U.K., and building the foundations for sustainable growth.”
The controversy
NatWest is 39% owned by the British taxpayer following the 2008 crisis, heightening the public interest in the bizarre saga.
“Despite a stellar performance as the first woman to take the helm of a U.K. bank, her mistake in discussing sensitive customer details with a journalist broke a sacred trust with the British public and her decision to step down was the only viable path,” said Danni Hewson, head of financial analysis at AJ Bell.
“She will be a loss, having worked her way up the ranks and championed diversity and inclusion in the sector with a huge focus on getting more women in financial services. But NatWest is no ordinary bank, it is still almost forty percent owned by the U.K. taxpayer, and the political and regulatory ramifications of this episode are likely to ripple out for months to come.”
Farage was informed last month that Coutts — a high-end private bank and wealth manager requiring clients to hold a minimum of £1 million ($1.29 million) in investments or borrowing, or £3 million in savings — planned to cut ties with him.
He subsequently filed a subject access request to obtain a dossier the bank held on him which he then published, claiming it showed the bank account was being terminated due to his political views.
Prime Minister Rishi Sunak and several members of his Conservative government issued statements condemning the bank and characterizing the termination of Farage’s account as an affront to free speech. Farage was offered an alternative account at regular main street bank NatWest, but declined.
His critics maintain that although frequent references are made to Farage’s political profile and controversial views, the reasons outlined for allowing the banking relationship to lapse were primarily commercial, and he was not “de-banked” as he claims.
The dossier
Minutes from the Wealth Reputational Risk Committee at Coutts on November 2022 state that Farage’s mortgage was due to expire in July 2023, at which point “on a commercial basis” it would not look to renew and therefore recommended winding down the banking relationship.
Without the mortgage, the bank indicated that Farage’s account value would fall below its commercial criteria. The committee recommended exiting the relationship in July, but was at the time seeking to retain Farage as a client barring any “flash points” that might pose further “reputational risk.”
Coutts said that upon expiry of Farage’s mortgage repayments, it “did not have the appetite to renew his mortgage or provide banking facilities” and had therefore implemented an “exit plan” that allowed for the bank to terminate Farage’s account earlier in the event of further controversy in the meantime.
“The Committee did not think continuing to bank NF [Nigel Farage] was compatible with Coutts given his publicly-stated views that were at odds with our position as an inclusive organisation,” the minutes added.
“This was not a political decision but one centred around inclusivity and Purpose.”
An update from March 10 this year noted that Farage’s account had “been below commercial criteria for some time and upon review of Nigel’s past public profile and connections, the perceived risks for the future weighed against the benefit of retention, the decision was taken to exit upon repayment of an existing mortgage.”
Farage’s politically exposed person status — conferred by British banks to high-ranking public figures who may be susceptible to bribery — was downgraded to “lower risk” as he is “no longer associated with any political party” since stepping down as Brexit Party leader in 2021.
Part of the client analysis from Coutts contained within the 40 pages of personal data, highlighted an array of news articles alongside Farage’s own media appearances and tweets, determined that the “values” he promotes did not align with the bank’s.
“Particularly given the manner in which he states (and monetises) those views – deliberately using extreme, hatful[sp?] and emotive language (often with a dose of misinformation) – at best he is seen as xenophobic and pandering to racists, and at worst, he is seen as xenophobic and racist,” it said.
“He is considered by many to be a disingenuous grifter and is regularly (almost constantly) the subject of adverse media.”
Farage is a longtime ally of former U.S. President Donald Trump, vocal supporter of Russian President Vladimir Putin, and prominent figure in the British hard right, having previously led the U.K. Independence Party (UKIP) and the Brexit Party.
The documents note long lists of controversial statements and activities, including his filming of migrants arriving in dinghies via the English Channel and reference to migrant boat arrivals as an “invasion,” and his blaming of violence in the city of Leicester last year on lawmakers who “promoted multiculturalism.”
Coutts acknowledged that Farage’s commentary “remains within the law regarding hate speech and arguably on the right side of ‘glorifying or promoting harmful behaviour’ (although we should be mindful of the role the ‘illegal immigrant / invasion’ rhetoric plays in contributing to discrimination and in some instances, violence, against migrants).”
The fallout
Farage told Sky News on Wednesday that he was “shocked with the vitriol” contained within it, and is calling for the resignation of the entire NatWest Group executive board along with a regulatory overhaul of Britain’s banking sector.
British economist and financial author Frances Coppola, in a blog post Tuesday, agreed that the language in the bank’s risk assessment was “mostly negative and at times possibly defamatory,” and said now-ousted CEO Rose was right to apologize directly to Farage before her departure.
However, Coppola argued that the bank was “absolutely right to conduct such an assessment and fully entitled to reach the conclusions that it did,” with the Coutts risk assessment noting that there is an “extra cost attached to managing the accounts of high profile individuals such as NF.”
“Assessing the risk and cost of a customer is a commercial judgement. And reputational risk is hugely important to a bank like Coutts. It is wholly unreasonable to argue that they should not have taken account of – or even evaluated – the risk to them of doing business with a person as controversial as Nigel Farage,” Coppola argued.
“Why should a bank accept the extra cost that you create for them if you don’t borrow from them and don’t keep enough liquid savings with them to support their lending to other people? And why should it keep your account open when you don’t meet its published criteria, given the reputational risk and general aggravation you cause?”
Britain’s Financial Conduct Authority said Wednesday that it had raised concerns with NatWest Group and Coutts about the “allegations relating to account closures and breach of customer confidentiality since these came to light,” and NatWest has launched an independent review of the series of events.
“It is vital that the review is well resourced and those conducting it have access to all the necessary information and people in order to investigate what happened swiftly and fully,” the FCA said in a statement.
“On the basis of the review and any steps taken by other authorities, such as the Financial Ombudsman Service or Information Commissioner, on relevant complaints, we will decide if any further action is necessary.”
Following a Wednesday meeting between Britain’s economic secretary to the Treasury, Andrew Griffith, and U.K. banking chiefs, the U.K. Treasury reiterated in a statement “the government’s clear position on the importance of legal freedom of expression,” adding it is “wholly unacceptable” to terminate the account of a person for expressing their political views.
“Banks will also be required to spell out why they are terminating a bank account – boosting transparency for customers and aiding their efforts to overturn decisions,” the statement said. “There will be limited exceptions to these requirements, for example to ensure that bank communications aren’t interfering with investigations into criminal activity.”
Whatever the outcome of Farage’s demands for further resignations and regulatory scrutiny, British banking has been thrust into the spotlight and could become yet another political hot potato ahead of a general election due next year.
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