Paul Thwaite’s first big decision as the new leader of NatWest Group Plc was to get rid of a senior executive in the midst of a political outcry. The next item on his agenda: earnings day.
(Bloomberg) — Paul Thwaite’s first big decision as the new leader of NatWest Group Plc was to get rid of a senior executive in the midst of a political outcry. The next item on his agenda: earnings day.
“It’s an understatement to say these are not ideal circumstances for anyone to take over,” Thwaite told reporters on Friday morning, two days after he was named as Alison Rose’s replacement. “It will take time to address some of those challenges but I’ve already taken action.”
The bank’s solid results that he helped to announce were almost completely overshadowed by a dispute over closing Nigel Farage’s account, which has thrust part-nationalized NatWest, its senior staff and the notion of banker-bashing back into the political spotlight.
Thwaite said Peter Flavel, the boss of NatWest’s Coutts subsidiary, left the bank on Thursday as he moved to contain the furor around Farage. Earlier in the week, Rose stepped down at the government’s behest over her inaccurate comments to a journalist about the Brexit campaigner. Farage has called for the whole board to quit and vowed to campaign for others who have been “debanked” on questionable grounds.
Formerly NatWest’s head of commercial and institutional banking, Thwaite is now set to be in charge for an initial 12 months. His appointment as interim CEO came as a surprise, yet board members were prepared for him to take over: they confirmed his name on an emergency succession plan several months ago, which regulators and Thwaite himself approved, according to Chairman Howard Davies.
“We were simply in a position where we could just open the drawer and pull out what our succession plan was,” Davies told reporters.
Little Known
Thwaite “is not that well known to the investment community,” said Joseph Dickerson, analyst at Jefferies International Ltd. “He has been running an important business for the group and looks like a safe pair of hands.”
He takes charge as NatWest starts to unpick how Coutts staff decided to drop Farage and whether other customers have been affected by similar issues.
All clients deemed to be “politically-exposed persons” who have been cut off in the past two years will be included in a review, which will be carried out by law firm Travers Smith and report by the end of October.
Internal Coutts documents suggested Farage — a former MEP and leader of the UK Independence Party who is now a conservative pundit — was in this category, which is a global standard that leads to extra scrutiny to guard against money-laundering and corruption. However, the documents also revealed Coutts staff discussed Farage’s personal views, his social media posts and a reputation as what they described as a “disingenuous grifter.”
Bloomberg News has reported that more than 1,300 people a year complain to the Financial Ombudsman Service about closed accounts, though the majority of cases resulted in no action. NatWest was the most complained-about bank on this issue.
City Minister Andrew Griffith has called on the Financial Conduct Authority to ensure elected officials in particular aren’t being locked out of the banking system unfairly. On Wednesday, Griffith met with bank bosses to discuss access to financial services more broadly. Banks will be required to give customers 90 days’ notice and clear reasons when they terminate accounts under planned rule changes.
Farage said the government efforts were “a good start, but we need more” in a video post on Friday. He said the current money-laundering requirements were “a sledgehammer to miss the nut, because it’s not stopping the big money launderers but it’s hitting the innocent very, very hard.”
‘Highly Exceptional’
Davies has defended the NatWest board’s initial backing of CEO Rose — a stance that was quickly demolished when aides to Prime Minister Rishi Sunak and Chancellor of the Exchequer Jeremy Hunt spread the word that she had to go.
“We believed it was a rational decision to make at the time” after speaking to Rose last week about leaking details about Farage to the BBC, Davies said. He “took soundings as you would expect from various stakeholders” before making the statement of support, though he wouldn’t give more details on those talks. The board was unanimous at all points, he said.
Davies was asked about his feelings on the government’s influence over the bank, which has owned a stake since a bailout in the 2008 financial crisis and remains its biggest shareholder with about 39%. “I don’t have feelings, I’m not that sort of guy,” he replied. “I have rational assessments of where we are in running the bank.”
For most of his eight-year tenure, Davies said there’s been no state involvement in commercial decisions or daily management. “I simply take note that this has been highly exceptional circumstances.” He added that he planned to remain as chairman, arguing that “it’s important that we have some stability here.”
Davies was also asked whether Farage would get his account back at Coutts, but the chairman — fresh from losing a CEO for discussing clients — declined to comment.
“I really should not and will not do that.”
–With assistance from Harry Wilson.
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