SECONDS out, round two.
On Friday morning, bosses at NatWest Group will appear before the media as the owner of Royal Bank of Scotland announces its results for the third quarter. It is highly likely that they will spend much of the call fielding questions from journalists once more on the fall-out from the abrupt departure of former chief executive Dame Alison Rose in July.
Dame Alison, you may recall, fell on her sword following an ill-advised conversation with the BBC business editor Simon Jack. It was the genesis of a saga which ultimately ended with the banker admitting to being the source of subsequent stories in the press concerning the accounts that the former UKIP leader Nigel Farage held with Coutts, the private bank owned by NatWest.
The episode sparked a political row which resulted in Dame Alison losing her job and debate over whether people could be "de-banked" on account of the views they hold.
Chairman Sir Howard Davies, who himself faced pressure to resign, was previously grilled by journalists on the affair when NatWest published its interim results just two days after Dame Alison stepped down.
But any hope the bank the bank held that this would draw a line under the matter was quickly dashed. It emerged in August that Dame Alison was in line for a pay-off worth £2.43 million under the terms of her 12-month notice period, bringing fresh criticism of the lender and not least from Mr Farage, who declared on social media that he thought the package was a “sick joke”.
READ MORE: Former NatWest chief receives £2.4m pay-off after Farage row
NatWest, which changed its corporate name from Royal Bank of Scotland in 2020, said Dame Alison would continue to receive her fixed pay while an independent review it commissioned into the Farage affair by law firm Travers Smith takes place. It said no decision would be made on her remuneration until the review is complete.
But with the bank still to confirm when the report will be published, it seems inevitable that journalists will home in on the matter when senior leaders face the media during tomorrow’s results call.
Interestingly, tomorrow's press conference will be hosted by interim chief executive Paul Thwaite and chief financial officer Kate Murray. It is not clear if there will be an appearance from Sir Howard, who had been a staunch defender of Dame Alison until political pressure from 10 Downing Street ultimately forced her to resign.
NatWest remains 38.7% owned by UK taxpayers as a consequence of its £45.5 billion bailout at the height of the financial crisis of 2008 and 2009.
Sir Howard will stand down as chairman next year when his nine-year tenure, the maximum recommended under City rules, comes to an end.
READ MORE: Does Alison Rose deserve sympathy after Farage row sees her lose job?
Yet the Farage scandal, which also led to the departure of Coutts chief executive Peter Flavel, is not the only subject on which NatWest may face scrutiny tomorrow. Major UK banks have been facing criticism for not adequately passing on the recent rises in interest rates to savers, leading the Financial Conduct Authority to urge them to pass the higher rates on more quickly to depositors.
In late July, the FCA set out a 14-point action plan to ensure banks and building societies pass on interest rate rises to savers appropriately, communicate with customers more effectively and offer better saving rate deals.
That came after it found nine of the biggest savings providers, on average, passed through only 28% of the base rate rises to their easy access deposits between January 2022 and May 2023.
Greater pass-through was found with regard to notice and fixed-term deposits, though the watchdog said there was significant variance between firms, with smaller providers offering higher interest rates on average than their larger competitors.
With NatWest expected by analysts to report an operating pre-tax profit of £1.4bn for the third quarter tomorrow, up from £1.1bn at the same stage last year, its top brass may well be questioned on the extent to which it is passing on the benefit of high interest rates, which have powered its results this year, to those who save with the institution.
READ MORE: NatWest chairman admits Dame Alison had to go but vows to stay on
Reporting its results for the third quarter yesterday, Lloyds Banking Group said its net interest margin had fallen by six basis points to 3.08%, which it noted had been expected “given the expected mortgage and deposit pricing headwinds”.
Customer deposits at the Bank of Scotland owner dropped by £5bn in the nine months to September 30 to £470.3bn. That came as a £9.4bn reduction in retail current account deposits was partly offset by a combined £5.2bn increase in retail savings and wealth balances.
The Bank of England base rate currently stands at 5.25%, following a flurry of increases voted through by its Monetary Policy Committee to combat surging inflation. The MPC voted to hold rates at 5.25% in September, which may signify that the long-running boost to bank margins from the increase in rates has peaked. It is next due to meet in November.
Meanwhile, as the spotlight falls once more on Dame Alison Rose, the star of another standard bearer for senior female banking leaders is rising.
Debbie Crosbie, a Scottish banker who spent 21 years with the former Clydesdale Bank and three years as the boss of TSB, has been chief executive of Nationwide since June last year, when she became the first female leader of the institution.
Reports suggest Nationwide has been among the most responsive of the major banks and building societies to rising base rates by offering higher returns to savers, and won plaudits earlier this year with its £100 cash payment for customers to help them with the cost of living.
It has also been on the front foot with regard to maintaining a presence on the high street. While many banks continue to slash their bricks and mortar networks, Nationwide is currently on TV with a major advertising campaign, starring Dominic West and Sunil Patel, in which it makes clear that it will not be closing branches.
The building society has extended its branch promise, under which it will keep a branch in every town or city it currently has a presence in until at least 2026. As of October 1, it had 605 branches on UK high streets, more than any other major bank or building society. However, it has been no stranger to branch closures itself in the fairly recent past.
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