NatWest has publicly acknowledged its serious shortcomings in the handling of the account closure for Nigel Farage, a right-wing British politician and TV personality, at its subsidiary Coutts. The bank's admittance comes on the heels of an independent review conducted by the Travers Smith law firm. The review, made public today, concluded that while the closure of Farage's account was lawful, it underscored significant errors in decision-making, confidentiality handling, and communication with Farage.
The report highlighted that commercial considerations were primarily responsible for closing Farage's account due to his significant loss-making relationship with Coutts. It also noted that reputational risks associated with Farage's role as a Brexit campaigner were secondary factors in the decision-making process. Despite these revelations, Farage dismissed the report as a whitewash and argued that his political views heavily influenced the decision.
In a direct response to the controversy, Howard Davies, Chairman of NatWest, has promised to implement the recommendations from the review. This incident has sparked a nationwide debate over "debunking" and led to the resignation of NatWest Group (LON: NWG )'s former CEO Alison Rose after she confessed to leaking confidential details to a BBC journalist.
The mishandling of Farage's case has had a significant impact on NatWest's financial standing. The bank's shares suffered an 18% drop following these revelations before slightly recovering to an 11% loss. This share plunge coincided with NatWest announcing its third-quarter earnings which showed a reduced net interest margin - a key profitability indicator - thereby adding to its financial challenges.
Despite the controversy surrounding Farage's debunking at Coutts, the UK Financial Conduct Authority found no evidence of politically motivated account closures. The bank is now focusing on rectifying its shortcomings in confidential data handling and communication processes to prevent similar incidents in the future.
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