Sir Howard Davies was preparing to leave NatWest in triumph. After serving eight years as chairman of the FTSE 100 lender, the Manchester-born economist announced in April that he planned to step down from the role by July next year.
Despite struggling to revive the bank’s share price, the City grandee’s stint has widely been regarded as a success: returning NatWest to majority private ownership; steering it through a sweeping restructuring; and overseeing a boost to profitability.
But Coutts’ decision to “debank” Nigel Farage because his views were at odds with the lender’s “values” has put paid to any hopes Sir Howard had of seeing out his remaining time at NatWest quietly.
While the group conducts a review into processes at Coutts – the private bank that NatWest owns – questions remain over who leaked Farage’s personal information to the BBC, with some even questioning Dame Alison Rose’s position as chief executive.
Given that Sir Howard, as chairman, is responsible for overseeing governance at the bank, as well as the performance of executives, his final stint at the lender is likely to be dominated by the Farage fallout.
How will the 72-year-old handle the crisis?
Before holding a variety of senior positions across the City, Sir Howard was a regulator, serving as a deputy governor at the Bank of England before becoming the inaugural chairman of the Financial Services Regulator (FSR) – the predecessor to today’s City watchdog.
In a 2001 interview, Sir Howard laid out his vision for the FSR, which was set up by Tony Blair’s Labour government. He said: “My concern is that people do not appreciate the fact that we’re going to be quite a major reforming regulator over the next few years.”
But unlike the Financial Conduct Authority (FCA) today, Howard appeared less interested in regulating the “culture” of companies. Instead, he said that he wanted the FSR to go after the “real rogues who are dealing on inside information”.
He also gave his view on the honorary title bestowed on him: “I don’t use it all. Not in any aspect of my life, except in newspapers who tirelessly insist on it. I just don’t like it. I know it’s a quirky thing. We get no correspondence addressed to ‘Sir and Lady’ from anyone.”
After leaving the FSR in 2003, the cycling enthusiast and a Manchester City fan became director of the London School of Economics but resigned in 2011 after accepting that the university’s reputation had “suffered” after accepting a £1.5m donation from Saif al-Islam, Colonel Gaddafi’s son.
At the time, he said it had been wrong to conclude that “it was just about reasonable” to accept the donation but added that there were no sanctions on dealing with the Libyan regime.
Sir Howard’s first big job in the City came in 2012 when he was appointed chairman of London-listed insurer Phoenix before taking up his current position at NatWest in 2015.
The bank’s board of directors, led by Sir Howard, appointed Dame Alison to the top job in late 2019, making her the first woman to lead a major British lender.
At the time, he said: “She brings extensive experience and a track record of success from her previous roles at the bank. Following a rigorous internal and external process, I am confident that we have appointed the best person for the job.”
But the Farage saga has raised question marks about Dame Alison’s leadership. Last week, she apologised to Farage over the closure of his accounts, but questions remain about who leaked information about his banking details to the BBC.
Earlier this month, the broadcaster’s business editor Simon Jack reported that the accounts had been closed because Mr Farage did not have enough money – but The Telegraph later revealed that the decision was connected to his views not aligning with Coutts’ “values”.
It was also revealed that Dame Alison and Jack were sitting next to each other at a charity event the night before Jack reported the story regarding Farage’s account.
The pressure intensified last week when Boris Johnson called on Dame Alison to resign if she is found to have leaked the details to the BBC and called for ministers to hold a leak inquiry.
NatWest declined to comment on the former prime minister’s column.
On Monday, both Jack and the BBC issued an apology to Mr Farage for “incomplete and inaccurate” reporting. Jack added that the story came from “a trusted and senior source”.
However, not everyone in the City thinks that the Government should intervene in the fiasco.
Gary Greenwood, a banking analyst at Shore Capital, says: “It’s certainly clumsy management but banks are terrified of doing something wrong given the significant regulatory fines they have been hit with in the past and could be hit with in the future for breaches of rules.”
He adds: “So they are having to tread an increasingly narrow tightrope in this respect. That said, these are still independent businesses and should be allowed to choose which customers they deal with like any other independent business can.
“Ultimately, I just think it will lead to lenders having to be more explicit about their customer criteria and demonstrating thorough processes when such criteria are not met. I doubt something like this would lead to Alison Rose stepping down or being sacked though.”
One City chief executive adds: “I think it’s likely that Alison Rose was probably unaware of the Coutts report. I think it is pretty crazy that there are calls for her to go.”
The next steps in this saga are likely to come when NatWest’s internal review of Coutts processes is complete, which will report to Dame Alison rather than Sir Howard.
However, Farage has vowed to find out who was behind the leak, which could threaten to blow the saga into a full-blown scandal.
Speaking on GB News last week, the leading Brexiteer said: “Can I ask you, Dame Alison, was it you? Was it you that breached my private client banking confidentiality? Was it you that told Simon Jack that?
“Well, I’m going to find out, because today I’ve put in another subject access request, this time to NatWest bank and in particular I’m looking for any personal correspondence, Dame Alison, that concerns me. So in 30 days time, we’ll know the absolute truth.”
This is where Sir Howard and the rest of the board, who have so far not commented on the Farage saga, will play a crucial role.
Normally outspoken, Sir Howard would ordinarily struggle to find common ground with the former UKIP leader. Last year he branded Brexit a “significant mistake”.
But after his time at the London School of Economics, Sir Howard has personal experience of how some controversies are not survivable for executives.
If the identity of the leaker is ultimately revealed at NatWest or Coutts, he might be the one making the fateful decision this time round.
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2023-07-24 21:13:00Z
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