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NatWest chairman says politics forced ousting of CEO Rose


NatWest chairman says politics forced ousting of CEO Rose By Reuters

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Published Jul 28, 2023 07:17
Updated Jul 28, 2023 09:01

© Reuters. FILE PHOTO: NatWest Group bank logo and rising stock graph are seen in this illustration taken March 12, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

By Iain Withers and Lawrence White

LONDON (Reuters) -NatWest chairman Howard Davies said political pressure prompted the shock ousting of chief executive Alison Rose, as the bank battles to contain the fallout from a damaging clash with former Brexit party leader Nigel Farage.

Britain’s biggest business bank has faced heavy criticism for mishandling the closure of Farage’s accounts with its private bank Coutts, after a dossier emerged showing a bank committee had said his views did not align with the lender’s own.

Rose stepped down on Wednesday after admitting to a “serious error of judgment” in discussing Farage’s relationship with the bank with a BBC journalist, while Coutts CEO Peter Flavel was ousted a day later.

Davies said he intended to stay at the bank for now and confirmed for the first time on Friday that political pressure had played a part in Rose’s exit.

“The political reaction to retaining Alison as CEO was such that her position was untenable,” he told reporters.

“We’ve lost a great leader,” he added.

Davies has himself come under pressure from some shareholders, with one top-20 investor telling Reuters on Thursday chairman his position looked increasingly shaky after the board backed Rose on Tuesday evening, only for her to leave hours later.

Davies said his plan remained for him to leave in 2024, as announced in April.

“I serve at the behest of shareholders and will continue to do so, it is important there is some stability in the bank,” he said on Friday.

NatWest (LON:NWG)’s shares were broadly flat in early trading.

The bank made scant reference to the incident in its earnings release on Friday, other than to confirm that its former commercial banking boss Paul Thwaite had been promoted to interim CEO for an initial period of 12 months.

NatWest reported pre-tax profit of 3.6 billion pounds ($4.6 billion) for the period, compared to 2.6 billion pounds the prior year and above the 3.3 billion pound average of analyst forecasts compiled by the bank.

The bank also announced an interim dividend of 5.5 pence per share and announced a share buyback of up to 500 million pounds for the second half of the year.

Government intervention appeared to seal Rose’s fate, after sources at the prime minister’s office and the finance ministry briefed newspapers late Tuesday evening they were not happy with her remaining in post.

NatWest is nearly 40% taxpayer-owned following its bailout during the 2008-2009 global financial crisis, adding more weight to the government’s position.

Interim CEO Thwaite will be tasked with trying to steady the ship after the damaging Farage episode, at a time when Britain faces an economic crunch from stubborn inflation and a cost-of-living crisis impacting many households.

NatWest booked a 233 million pounds charge for potential loan defaults – compared to the release of 54 million pounds last year – and lowered its net interest margin forecast for the year to below 3.2%, with an expectation of it hitting 3.15%.

Rivals Barclays (LON:BARC) and Lloyds (LON:LLOY) earlier this week set aside more cash to cover potential soured loans, while Barclays warned intensifying competition would eat into its margins.

($1 = 0.7820 pounds)

NatWest chairman says politics forced ousting of CEO Rose

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