Nigel Farage has achieved a feat of which activist investors can only dream. In less than a week, he has seen off two chief executives and left a chairman flailing on the ropes, all without buying a share. It’s hardly the outcome Coutts’ risk management committee imagined when it considered the reputational risks of de-banking the controversial former politician. As own goals go, that’s a Messi banger.
Yet from the moment that Dame Alison Rose sent a letter of apology to Farage, her days as NatWest’s first female chief executive appeared numbered.
Not because the apology lacked sincerity, but because of what it didn’t say. Rose was sorry for the ‘deeply inappropriate comments’ contained within a 40-page internal Coutts’ dossier that described Farage as a ‘grifter’, promising a review into the private bank’s procedures, but she failed to reference the leak about his financial status.
Short of hoisting an illuminated ‘it was me’ arrow above her head, Rose’s omission simply served to confirm suspicions that she had discussed Farage’s account with BBC business editor Simon Jack at a charity dinner – the night before the story appeared. (C’mon Simon, you could have waited another day.)
Her inevitable public admission meant that, despite the initial support of NatWest’s board and talk of financial penalties, she had to resign. The bank’s biggest shareholder – the government – insisted. As Warren Buffett once said reputation can take 20 years to build and just five minutes to ruin. For Rose it took 31 years and an ill-advised conversation with a journalist.
Banking is built on trust and discretion. Like the Catholic confessional, client confidentiality is sacrosanct. No matter how innocuous Rose may claim she believed the conversation was, it should never have taken place. A simple ‘no comment’ was the answer.
But here’s where the story seems (at least to me) to have more holes than Thames Water’s pipework. I covered the banking beat for national newspapers for more than a decade. Whenever I met or dined with any senior executive, they were briefed on me, my interests, and any issues I would be likely to raise. (A former NatWest finance director even quizzed me on my economics degree and the fallacy of rational expectations.)
I find it hard to believe that Rose attended a media event, with the ongoing Farage farrago, without comms advice to studiously avoid the subject. She claims her conversation with Jack covered information she believed was already in the public domain – that Farage was not wealthy enough to bank with Coutts.
As Warren Buffett once said reputation can take 20 years to build and just five minutes to ruin
If that was the case, why would the BBC make contact to confirm details of the conversation and check she was happy for the news story to run? The key word being news! Surely, alarm bells would have rung that, despite having started as a graduate trainee and learning on day one never to discuss clients with people outside the bank, she might have overshared? Comms could have stepped in at this point and possibly saved Rose from herself.
But no! The story appeared with, according to the BBC, Rose’s approval. In outing herself, Rose claims she had been told the decision to de-bank Farage was commercial rather than, as she later learned, motivated by distaste for his political and personal views.
Yet surely the de-banking of an individual as controversial as Farage by its subsidiary would have been raised at NatWest’s exec committee. If Rose had not emasculated her communications department, removing the comms seat from the committee, perhaps a voice of reason might have prevailed at the discussion.
Farage was never going to go quietly, particularly after other banks subsequently refused to offer him an account. Initially, he wrongly believed his de-banking related to being a politically exposed person. The dossier revealed the truth: Farage’s views did not align with Coutts’ values, and the bank really did not care for him. (In a remarkable understatement, Coutts’ ousted chief executive Peter Flavel said Farage’s experience did not meet the bank’s ‘high standard of personal service’.)
It is unlikely that Farage’s views have changed since he opened the account, so that must mean that the values of the bank – which once counted General Pinochet among its clientele – have. That’s fine. Society norms change. What was once appropriate is no longer so, and a responsible organisation will adapt its behaviours and values to reflect this. So, have the rules of Coutts’ game changed? If its values now play a role in client selection, this should be a stated policy. The risk committee conceded other clients likely shared Farage’s views. Are their accounts under review? Or are they too big to, er, bale? Your values are your values: they should be non-negotiable.
If its values now play a role in client selection, this should be a stated policy.
The Co-op Bank celebrates its ethical stance, and its website declares that it will not provide banking services to businesses or clients that conflict with its ethical policy. Coutts’ website is remarkably bereft of its values, instead highlighting its inclusive culture – but only in relation to colleagues. Surely clients, to whom Coutts says it acts as a ‘trusted partner, adviser and friend’, should now be informed that this is perhaps misleading.
If inclusivity encompasses clients, then one of the first steps that the new Coutts boss should take is to confirm the rules have changed, and inform clients that their personal views or politics may count against them. Or is it really the case that these values only mattered when it came to Farage?
