July 31, 2023: On Friday, NatWest reported a leap in first-half profit as it battles to contain the fallout from a clash with retired Brexit party leader Nigel Farage that plunged the bank into crisis and cost CEO Alison Rose and a key lieutenant their jobs.
Britain’s most famous business bank has faced heavy criticism for mishandling the closure of Farage’s accounts with its private bank Coutts after a dossier appeared showing a bank committee had said his views did not align with the lender’s own.
On Wednesday, Rose stepped down after admitting to a “serious error of judgment” concerning Farage’s association with the bank with a BBC journalist. At the same time, Coutts CEO Peter Flavel was ousted a day later.
The bank made scant connection 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 a pre-tax profit of £3.6 billion for the period, compared to £2.6 billion the prior year and above the £3.3 billion average of analyst forecasts which the bank mixed.
The bank declared an interim dividend of 5.5 pence for each share and a stake buyback of up to £500 million for the year’s second half. Its shares were up 0.4% in early trading.
NatWest remains under pressure over the Farage scandal. On Thursday, one top-20 investor told Reuters that chairman Howard Davies’ position looked increasingly shaky after the board backed Rose on Tuesday, only for her to leave hours later.
Government intervention seemed to seal Rose’s fate after sources at the prime minister’s office and the finance ministry briefed newspapers late Tuesday evening that they were not satisfied with her remaining in post.
NatWest is nearly 40% taxpayer-owned following its bailout during the 2008-2009 international financial crisis, adding more weight to the government’s position.
Interim CEO Thwaite will try to steady the ship after the damaging Farage episode when Britain faces an economic crunch from stubborn inflation and a cost-of-living crisis impacting many households.
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