Sunak and Hunt accused of ‘damaging UK plc’ over NatWest boss’s exit

 

Sunak and Hunt accused of ‘damaging UK plc’ over NatWest boss’s exit

 

Concerns raised over anonymous briefings that triggered early-hours resignation of Dame Alison Rose

 

Anna Isaac and Kalyeena Makortoff and Kiran Stacey

Wed 26 Jul 2023 18.54 BST

https://www.theguardian.com/business/2023/jul/26/sunak-hunt-uk-natwest-alison-rose

 

The prime minister and the chancellor have been accused of “damaging UK plc” and failing to follow due process amid concern over anonymous briefings that triggered the early-hours resignation of NatWest boss Dame Alison Rose.

 

“There is a real sense of disquiet that political pressure has led to a midnight exit for such an important banking CEO,” an official at the City regulator, the Financial Conduct Authority, told the Guardian. “They should have allowed due process.”

 

The comments were echoed by a Treasury source, who described “a sense of disbelief” and “frustration” among banking bosses about the government’s handling of the row, and by the shadow chancellor, Rachel Reeves, who called out “bullying attitudes” towards Rose.

 

The first woman to run a big UK bank, Rose was forced to quit in a row over the decision to close accounts held by the former Ukip leader Nigel Farage at the exclusive private bank Coutts, a subsidary of NatWest. In a surprise to City observers, the announcement of her departure came at 1.29am on Wednesday.

 

NatWest’s chair, Howard Davies, had released a statement just before 6pm on Tuesday expressing support for Rose.

 

However, from about 10pm that night, newspapers began reporting sources close to No 10 and the chancellor as saying that the government had “serious concerns” about her staying in post. The board was forced to reconvene at 11pm, when it was agreed that Rose had to leave.

 

It is understood that NatWest was in regular communication with the Treasury throughout the discussions, and that it was notified of the board’s original decision to back Rose before the statement endorsing her was released. There was no pushback from ministers or Treasury officials at that time, they added.

 

The Guardian has been told that there was a change in position only after the release of NatWest’s statement – even though its contents had been discussed with officials – resulting in the Treasury putting in calls to the bank’s board to voice its lack of confidence in Rose. Without support from its largest shareholder, the board reversed its decision.

 

The turmoil reverberated on the stock market, with NatWest the biggest loser on the UK’s FTSE 100 index on Wednesday, falling by 3.7%. That wiped more than £840m from its value, including hitting the taxpayer’s stake by about £320m.

 

The change in approach came as a shock to the bank’s employees, given Rose’s long list of government-backed accolades. She led state reviews of female entrepreneurship and UK energy efficiency, and was included in the 2022 honours list. However, on Wednesday Rose was sacked by the government from the female entrepreneurship initiative, known as the Rose Review.

 

In an interview to be broadcast on Channel 4 on Wednesday, recorded before Rose stepped down from the bank, Reeves defended her and attacked Treasury ministers, accusing the government of “picking a fight with banks on behalf of Nigel Farage”.

 

Reeves said: “I don’t like some of what I see as bullying attitudes towards her. She’s the first female chief executive of NatWest. She took over at a time when that bank had real big problems. It seems to me that Alison Rose has done a good job turning that bank around.”

 

Darren Jones, the chair of the business select committee, suggested that No 10 had demonstrated double standards over the Farage case by pressuring a chief executive to resign.

 

The government, he argued, had previously failed to intervene directly in matters involving bosses breaking employment law, treating staff unfairly and failing to protect customers’ money.

 

“If ministers really wanted to crack down on CEO behaviour, they would have done so in many cases by now,” the Labour MP said. “So why intervene in the Coutts-Farage case? It’s about power. The power Farage seems to have over the Tories and the lack of it that everyday workers and customers have.”

 

The government is the largest shareholder in NatWest, with a 39% stake. Day to day, the relationship is managed at arm’s length and on a commercial basis by UK Government Investments (UKGI). This makes the level of recent political intervention especially unusual, according to Treasury sources.

 

“This should not have been a matter decided by anonymous briefings to the press,” a source at the Treasury told the Guardian. “There is frustration among some banking CEOs about what this means for their relationship with the government.”

 

“There was a sense of disbelief [in Treasury] that they [Downing Street] decided to add to pressure on her and precipitate a late-night exit. It was a damaging decision for UK plc.”

 

Multiple sources accepted that Rose’s days may have been numbered given the importance of banking confidentiality, but her chaotic exit was unnecessary.

 

An FCA source echoed the concerns, saying the government “should have allowed due process,” noting that NatWest had committed to an independent review of how it handled the former Ukip leader’s banking and confidentiality.

 

Aside from financial crisis-era interventions on executive pay and conversations around the departure of the former chief executive Stephen Hester in 2013, ministers have taken a largely hands-off approach to the management of NatWest. The bank came under majority state control in 2008 after the government stepped in with a £45bn bailout in order to protect customer deposits.

 

Speaking on Wednesday after a meeting with bank bosses about how to treat customers regardless of their views or political status, Andrew Griffith MP, the economic secretary to the Treasury, said it was right that Rose had resigned.

 

“This would never have happened if NatWest had not taken it upon itself to withdraw a bank account due to someone’s lawful political views. That was and is always unacceptable,” Griffith said.

 

“I hope the whole financial sector learns from this incident. Its role is to serve customers well and fairly – not to tell them how or what to think.”

 

In a contrast to the position taken by Labour’s shadow chancellor, the party’s leader, Keir Starmer, expressed sympathy for Farage, saying NatWest had “got this one wrong” and that it was right for Rose to go.

 

In a radio phone-in on BBC Radio 5 Live, he was asked if he felt sorry for Nigel Farage. “Yeah, he shouldn’t have had his personal details revealed like that. It doesn’t matter who you are, that’s a general rule,” he said. “I certainly don’t think anybody should be refused banking services because of their political views, whoever they are.”

 

A Treasury spokesperson said: “This was a decision made by the NatWest board and Alison Rose. The NatWest board is responsible for the bank’s strategic and operational management.

 

“The government has been clear throughout that, as a matter of public policy, it is wrong to remove someone’s bank account because of their political views or something that they said. Free speech within the law and the legitimate expression of differing views is an important British liberty.”

 

The FCA and No 10 declined to comment. NatWest was approached for comment.