The NatWest chair, Sir Howard Davies, has said he is to stay in post to restore “stability” and ensure and “orderly transition”, quelling speculation the embattled high street lender was set to lose a third senior figure over the Nigel Farage banking row.
Davies announced the appointment of an external law firm to review the closure of Farage’s accounts at Coutts, the private bank owned by NatWest.
The review will look into the information Dame Alison Rose shared with a BBC reporter that led to her shock resignation as chief executive in the early hours of Wednesday. The Coutts chief executive, Peter Flavel, stepped down a day later.
Speaking during a presentation of NatWest’s financial results on Friday morning, Davies, who was already due to retire from his post in the summer of 2024, said the search for his successor would continue in a “completely normal” manner. A day earlier, the prime minister, Rishi Sunak, had declined to publicly back Davies.
“My intention is to continue to lead the board,” Davies said. “My understanding is that we do have the support of our main shareholder and of the regulators, for us to continue to steer this bank forward.”
NatWest’s largest shareholder is the state. The government holds a 38.5% stake, having stepped in to protect savers by bailing out the lender during the 2008 financial crisis.
“It’s important that there is some stability here in the bank, and that we maintain our progress. And eventually, of course, there will be an orderly succession both for me, and indeed, the new chairman will have to review the CEO position,” he said.
Asked about whether he had concerns over the government’s influence on Rose’s departure, Davies said it had been a “highly exceptional circumstance. The government in the normal way during my eight years here, has not interfered with commercial decisions in this bank. And indeed, I’m grateful to them for that.”
NatWest’s shares recovered some ground on Friday, rising 3% by mid-afternoon. That followed a 4.5% drop over the 48 hours after Rose’s departure, when almost £1bn was wiped off the bank’s market value.
Davies defended the board for its decision to unanimously back Rose on Tuesday afternoon, before being forced into a U-turn hours later after pressure from Downing Street.
“We believe that was a rational decision to make at the time. However, the political reaction to that was such that Alison and I then concluded, and the board supported the view, that her position was then untenable.”
Rose resigned after admitting she had discussed Farage’s bank accounts – which had been closed without explanation – with the BBC’s business editor, Simon Jack, in an apparent breach of client confidentiality.
The BBC reported Coutts had dropped Farage after he fell below its financial threshold, which requires customers to hold at least £3m in savings or £1m in loans or investments.
However, Farage subsequently obtained and revealed documents showing that, while he had been below the bank’s “commercial criteria” for some time, the decision to shut his accounts was also based on concerns at Coutts that his “xenophobic, chauvinistic and racist views” posed a risk to its reputation.
Despite offering Farage a personal apology, and pledging to launch an independent review into the circumstances that led to the closure of his accounts, political pressures ultimately forced Rose to step down in the early hours of Wednesday morning.
The Standard Chartered bank boss, Bill Winters, joined other colleagues in defending Rose on Friday, saying her apology should have been accepted and her resignation was a “pretty heavy price to pay for an error of judgment”.
Farage was still calling for Davies to leave the banking group on Friday afternoon. He said on Twitter: “Sir Howard remains as the NatWest Chairperson… The former FSA boss who tried to keep in place a CEO who broke many of the FCA rules. It’s a bad move.”
Paul Thwaite took over as the interim chief executive on Wednesday, and will be in place for at least 12 months. One of his first actions in the role was to oust the Coutts boss, Peter Flavel.
Davies said he first became aware of Rose’s discussions with the BBC last week, and subsequently told her that the board needed a “clear statement” regarding the conversation. “We met on Monday to discuss it, and that led to the events of this week.”
The independent review into the Farage case will be conducted by the law firm Travers Smith, with three main aims.
One of its more sensitive tasks will be to determine the circumstances and nature of any leaks of confidential customer information to the media.
The review will also check why Farage’s accounts at Coutts were closed, how the controversial internal reports about his political views and actions were compiled, and how the bank communicated with him about his accounts and their closure.
It will also examine the “timing and content” of updates about Farage at NatWest Group level – suggesting this could include memos or briefings from Flavel to Rose.
In a second phase, Travers Smith will look at all the accounts closed at Coutts over the past 24 months. It will follow a similar approach: looking at questions of how, why and what was said to all other customers whose accounts were shut down.
While the first phase of the review is expected to take four to six weeks, the entire process is expected to run until the end of October.
It is not yet clear how widely the resulting report will be shared, given it is likely to deal with sensitive information. However, the findings and steps the bank plans to take in response will be made public.
Davies said the bank would start making decisions on pay for Rose and Flavel – which could involve docking their pay packages – after the independent review concluded.
