The share price of Coutts’ parent bank, semi-state owned Natwest, has slumped 8% over the past 10 days, wiping £1 billion off its market cap and generating juicy returns for short-selling hedge funds.
The still-blossoming scandal surrounding the prestigious London-based private bank Coutts’ decision, around a month ago, to close Nigel Farage’s bank account has already claimed two senior scalps — those of Dame Alison Rose, the CEO of Coutts’ parent bank and “Big Four” lender, Natwest (formerly known as the Royal Bank of Scotland) and Coutts’ chief executive Peter Flavel. Rose resigned on Wednesday (July 26), Flavel was pushed on Thursday (July 27).
Dame Rose was the first ever women to become CEO of a major British bank after leading a government investigation into the under-representation of women in business. She was at the helm of Natwest for four years before losing her job this week for leaking confidential details of Farage’s finances to the BBC. It was the Sunak government, which claims to have been shocked by the scandal despite holding 39% of the formerly bailed out lender’s stock, that made the final call.
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.
Following her “resignation” from Natwest, Dame Rose also lost her advisory roles on the prime minister’s business council, energy efficiency taskforce and net zero council. But even that was not enough to sate Farage’s desire for retribution. In an interview on BBC Breakfast Time on Wednesday the former UKIP leader said the whole board should go:
“She’s gone and it is right that she has gone. However, I think this brings into question the whole of the board. Frankly, because of how they have behaved, I think they should all go.”
Share Price Slump
Natwest’s share price has slumped 8%, wiping £1 billion off its market cap, much of which is propped up with public funds, and generating juicy returns for short-selling hedge funds [1]. The rout began in earnest on July 19, the day Farage revealed the ace up his sleeve: a 40-page dossier of internal Coutts emails and memos detailing the reasons behind the bank’s decision to close his account, which was published in full by the Daily Mail and the Daily Telegraph.
This, of course, is not the first time that the crème de la crème of the British establishment has massively underestimated Farage and has paid a heavy price as a result. The last time culminated in the UK’s rather disorderly exit from the European Union — an outcome that most global financial institutions, bar certain tax-avoiding hedge funds, as well as the City of London Corporation feared and publicly opposed.
This time, the ensuing scandal has already lead to the resignation of a Big-Four bank CEO who only months ago received a damehood for her services to the financial sector. It has caused yet more reputational damage to a bank whose reputation has never recovered from the woeful mismanagement and myriad scandals that preceded its collapse and subsequent bailout in 2008. It has also drawn much-needed public attention to a long-standing but accelerating trend (not just here in the UK but in the US and presumably other parts of the world): the “de-banking” of people with politically inconvenient views.
Given their acute political sensitivity, it is unlikely that the Coutts and Natwest boards took these actions without the tacit knowledge of UK banking regulators and the Bank of England, as Alexander Mercouris noted in a recent episode of The Duran. It is also hard to imagine that government officials were left out of the loop given the State’s part-ownership of Natwest.
Since the scandal has broken, the Financial Services Minister Andrew Griffith has pledged to instruct banks and fintechs, including the Big Four (NatWest, Lloyds, HSBC and Barclays), to take action to ensure customers do not lose access to services over their political views. The government has also outlined reforms that will compel banks to provide more notice of account closures and explain their motives. How these processes involve and indeed whether the government actually keeps to its word remains to be seen…
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Nick Corbishley 