STATE-backed NatWest Group, owner of Royal Bank of Scotland, was responsible for a “number of serious failings” in its treatment of Nigel Farage, which saw details of the former UKIP leader’s financial affairs leaked to the media, an independent report has found.

Shares in the bank fell more than 10% this morning after it admitted “clear shortcomings” in the decision of Coutts, the NatWest-owned private bank, to close the accounts of Mr Farage, “as well as failures in how we communicated with him and in relation to client confidentiality”.

But it said an independent review confirmed that the exit decision had been lawful and made in accordance with the relevant bank policies and processes.

Farage branded the findings of the report a "whitewash" and "laughable".

NatWest, which is 38.7% owned by UK taxpayers, commissioned prominent law firm Travers Smith to carry out a review into the circumstances which led details of Mr Farage’s affairs to be leaked to the BBC by former chief executive Dame Alison Rose and the decision to close its accounts. Dame Alison stepped down in late July after admitting to being the source of stories about Mr Farage’s accounts being closed which appeared in the BBC, having initially retained the support of the board, including chairman Sir Howard Davies.

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No decision yet has been reached into the exit remuneration of Ms Rose, who is in line for a £2.43 million pay-off under the terms of her 12-month notice period.

The Financial Conduct Authority said separately this morning that it is conducting supervisory work into governance, systems and controls at both NatWest and Coutts to identify and address any significant shortcomings.

Sir Howard said: "This report sets out a number of serious failings in the treatment of Mr Farage. Although Travers Smith confirm the lawful basis for the exit decision, the findings set out clear shortcomings in how it was reached as well as failures in how we communicated with him and in relation to client confidentiality. We apologise once again to Mr Farage for how he has been treated. His experience fell short of the standards that any customer should expect.

"Our job now is to make sure that does not happen again. The bank is committed to implementing all the recommendations made by Travers Smith and we are making substantive changes to our policies and procedures, in particular to ensure that the lawfully protected beliefs or opinions of customers do not play any role in our decision making.

"The board is considering the findings and deciding on the appropriate outcomes on other matters. It is important we have regard to all necessary processes and due consideration of issues including the bank's obligations around privacy and confidentiality."

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NatWest said it has accepted and will implement all of the recommendations made by Travers Smith and make other changes to its policies and procedures to “deliver better outcomes for its customers and to ensure that the lawfully protected beliefs or opinions of customers do not play any role in exit, retention or onboarding decisions”.

The findings of phase one of the Travers Smith review came as the bank reported a pre-tax operating profit of £1.33 billion for the third quarter, up from £1.09bn at the same stage last year.

But the bank signalled that net interest margins will continue to come under pressure, as customers shift money from current accounts to lower-margin fixed term accounts to take advantage of higher interest rates. The Bank of England base rate is currently 5.25%.