NatWest Group Plc’s board thought they could douse the political firestorm that has engulfed the bank for the better part of a month. But they forgot to account for the most important shareholder: the UK government.
(Bloomberg) — NatWest Group Plc’s board thought they could douse the political firestorm that has engulfed the bank for the better part of a month. But they forgot to account for the most important shareholder: the UK government.
Just hours after the bank expressed full confidence in chief executive Alison Rose, aides to Prime Minister Rishi Sunak and Chancellor of the Exchequer Jeremy Hunt began to spread the word that she had to go. Officials told reporters that the government had significant concerns about Rose staying on after she admitted leaking information about the closure of accounts held by Brexit-campaigner Nigel Farage.
Behind the scenes, even more pressure was building, as senior government officials contacted the bank, which is part owned by the UK, to relay that same message directly.
That night, the NatWest board convened again in an emergency gathering. And around 1:30 a.m. London time, it staged a massive u-turn, announcing that Rose was leaving by mutual consent.
The dramatic ouster capped a weeks-long saga that pitted the Conservative-led government against a pillar of one of the UK’s most important industries. The episode dredged up old debates about Farage’s role in Brexit as rightwing media took up his cause and cast it as a fight for free speech against corporate elites.
This story is based on interviews with lawmakers and government officials, who spoke on condition of anonymity discussing non-public information.
Political Decisions
Farage’s revelations a month ago about his bank accounts were just the beginning.
While some media reports linked the closure to commercial decisions, Farage subsequently said internal documents at Coutts — owned by NatWest — showed he was kicked out because his views didn’t align with those of the bank.
NatWest’s statement on Tuesday inflamed the situation. In it, Rose confirmed she had multiple conversations about the bank’s business relationship with Farage with a member of the press.
Her admission she was the BBC’s source prompted a shift in the government attitude, according to a person familiar with the matter. At that point the matter became about client confidentiality and the government felt compelled to step in.
Within Downing Street, Sunak was concerned about the unfolding situation. By Tuesday, the government was hoping that the bank would figure out by itself that Rose needed to go.
When it was clear that NatWest was going to try to protect her, it took steps to, as one insider put it, push the board in the opposite direction. That was the intention behind Sunak and Hunt taking the step of letting their views circulate.
Political Views
The UK government is the bank’s largest shareholder, although it always has reiterated that it is an arms-length relationship. It has a 39% stake, a legacy of the UK’s rescue of the banking sector during the global financial crisis.
Asked about the government’s role in Rose’s departure, City Minister Andrew Griffith said Wednesday that Treasury officials and bank executives are in ongoing contact, but that he “wouldn’t comment on individual conversations that may have happened.”
He said it was right that Rose stepped down and people shouldn’t lose their bank account because of a legally held political view. He added that Sunak and Hunt “have been clear throughout about the principle at stake here.”
But there are also political considerations at play.
Sunak, aware of the anger among his own Conservative lawmakers, has taken a strong line on the issue.
Trailing the opposition Labour Party in polls, it suited him to both unite disconsolate backbenchers against a common enemy and divert public attention away from the government’s attempts to grapple with inflation and crises in the health service and housing.
In his Bloomberg interview, Griffith sought to capitalize on the issue, saying: “Worryingly the opposition have had nothing to say about freedom of speech and debanking.”
“This is win-win for the Tories,” said Salma Shah, who was an adviser to former Chancellor Sajid Javid. “They get to be on the side of propriety and also shut down the widespread complaints from the party. But it doesn’t have much punter value. People across the country won’t care very much about this issue directly.”
Over the weeks, the story expanded into a broader scandal, becoming tangled up in politics and the culture wars that have taken over much public debate.
There have been accusations of discrimination by “woke” businesses and the affair has, inevitably, fed the Remainer vs Brexiteer battles that have defined the UK since 2016.
Given the overlap between Farage devotees and some sections of the Conservative Party base, particularly on immigration, it became in Sunak’s interest to tap into the controversy for his own benefit. Even if it meant sacrificing Rose, whom he has previously appointed to government taskforces.
Just a week ago, Rose joined him at the Cabinet table in Downing Street as he hosted a meeting of his business council, with photos showing the pair laughing together.
Now, the premier has moved quickly to cut ties in the wake of her resignation.
On Wednesday, his office announced she’d resigned from the council. She also quit her roles on the government’s energy efficiency and net zero bodies, after Energy Secretary Grant Shapps asked her to step down.
–With assistance from Ellen Milligan, Alex Wickham, Alex Morales and Lizzy Burden.
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