We are all still paying the price for this bank’s mistakes
WHEN Alison Rose, soon to be garlanded as a Dame, discarded the tarnished title of Royal Bank of Scotland and reverted to NatWest in July 2020 it finally looked like a new start.
As the first woman chief executive of one of Britain’s high street banks and a NatWest lifer Rose seemed the ideal choice for Britain’s dominant lender to smaller and medium sized enterprises.
Unlike her predecessors Rose promised more sensitive customer service and aimed – through better financial performance – to wean the Government off the share register and restore NatWest fully to the private sector.
It hasn’t quite worked like that. The dark shadow of gung-ho former chief executive Fred Goodwin (whose knighthood was ‘cancelled’ by the Queen after he all but collapsed the bank) still hangs over its capacious, egocentric HQ on the outskirts of Edinburgh.
Rose sought to obliterate Goodwin’s grandiose legacy by turning the HQ into a food bank in the aftermath of Covid.
What has never been revealed until now is that nearly 15 years after the Global Financial Crisis and with the taxpayer still picking up part of the bill through its near 38 per cent holding, Goodwin is living high off the hog with a pension now worth an estimated £545,000 a year.
We shouldn’t be surprised. The Tories, have sought to manage NatWest, as if it was fully in the private sector which has meant a light touch when it has come to pay and bonuses.
Boardroom rewards may lag behind those at the other high street lenders, but they have managed to soak up millions of pounds in public funds since the bank’s rescue in 2008. It is illustrative of the culture that in spite of Rose’s indiscretion in the disclosure of Nigel Farage’s banking affairs to a BBC journalist, that in the tradition of Goodwin she has not apologised for her errors. Saying sorry might jeopardise her access to a potential pay and share package worth up to £11million amid widespread calls for a clawback to shareholders.
None of Britain’s banks have covered themselves in glory since the financial crisis. Allegations of former Barclays boss Jess Staley’s close relationship with convicted sex offender Jeffrey Epstein are a terrible stain on its reputation and the handling of the issues by the bank’s board.
Lloyds Bank has never fully resolved compensation issues for the fraud at its Reading branch which caused harm to showbiz star Noel Edmonds among others.
And HSBC paid vast fines over Mexican money laundering and fell foul with the authorities over the colourful client list at its Geneva private bank.
The difference is that all of these banks are fully in the private sector and it is market investors who have paid or are paying the price for mistakes. At RBS-NatWest the mistakes mean that taxpayers are still on the hook.
A long standing dispute with victims of NatWest Global Restructuring Group, which bankrupted borrowers after the financial crisis, has never been fully resolved. The bank is also at the centre of a money laundering probe, centred on its Bradford branch which has still to come to trial.
Compared with these sins the cancellation of Farage’s account at subsidiary Coutts and the ineptitude in the handling of the affair may seem relatively minor league. Nevertheless, it shows deep cultural and governance failings at the very top right up to NatWest chairman Sir Howard Davies.
The country needs to rethink its relationship with NatWest speedily. Once a new more trustworthy management is installed it would be sensible for the Government to sell its remaining shares even if this means a loss for the Exchequer.
The great concern must be that if Labour is elected NatWest could be ordered to lend to meet the new Government’s objectives. This would increase the risk of huge loan losses and could result in another enormous bill for taxpayers. That cannot be allowed to happen.