NatWest Acknowledges 'Significant Lapses' in Terminating Nigel Farage's Coutts Bank Account

NatWest has acknowledged significant shortcomings in its treatment of Nigel Farage, a controversial ex-politician and TV presenter whose account was terminated earlier this year at Coutts, a subsidiary of the UK banking group.

An impartial investigation, initiated by the NatWest board in July, revealed that while the closure of Farage's account was deemed lawful and consistent with internal regulations, the bank erred in the decision-making process, mishandled sensitive information, and communicated inadequately with Farage.

NatWest chairman Howard Davies announced on Friday that the company will fully implement all the recommendations from the report. Following this news, shares in the bank initially dropped by up to 18%, but later recovered slightly to trade down by 11% at 6.41 a.m. ET. Additionally, NatWest released its third-quarter earnings report on the same day, which revealed a decrease in its net interest margin from the previous quarter.

The decision to close Farage's account was primarily driven by commercial considerations, according to a report by law firm Travers Smith. Coutts determined that its relationship with the Brexit campaigner was generating significant losses. The report also acknowledged concerns about the reputational risk associated with retaining Farage as a client, although these concerns did not influence the final decision.

Farage, the former leader of the right-wing UK Independence Party, branded the report a "whitewash," rejecting the notion that his perspectives had not substantively impacted the termination of his account.

FILE PHOTO: RBS CEO Alison Rose attends the annual CBI Conference in London, Britain November 18, 2019. REUTERS/Simon Dawson/File Photo

Simon Dawson/Reuters

"The argument put forward by the law firm, asserting that my departure as the UK bank CEO was unrelated to the political disparities between my views and those of the bank, is utterly ridiculous," he expressed on X, formerly recognized as Twitter.

Farage mentioned that he had submitted a request for information to the bank earlier this year, where he found that the term Brexit had been mentioned a total of 86 times.

In June, Farage, who currently hosts a show on GB News, announced that he had been excluded by a prominent UK bank. Subsequent reports in UK media identified the bank as Coutts, a high-end bank owned by NatWest.

Former CEO of NatWest Group, Alison Rose, resigned in July after confessing to leaking confidential information regarding account closures to a BBC journalist. This scandal sparked a public discussion on the increasing trend of "de-banking" individuals due to their political beliefs. In September, the Financial Conduct Authority of the UK conducted a preliminary investigation and found no evidence to indicate that banks had terminated customer accounts primarily based on their political views during the previous year ending in June.

Significant shortcomings

NatWest and Coutts are currently under investigation by the UK's financial watchdog following the release of the Travers Smith report. The report highlighted possible breaches of regulations, specifically surrounding account closures and the management of customer complaints.

The FCA stated that it is currently assessing the effectiveness of the firms' governance, systems, and controls to identify and rectify any major deficiencies. Davies admitted the presence of "serious failings" mentioned in the report and confirmed that the bank is implementing significant changes to its policies and procedures. These changes aim to prevent the inclusion of customers' lawfully protected beliefs or opinions in the decision-making process.

The UK government holds a stake of around 39% in NatWest, after it bailed out the banks then-parent Royal Bank of Scotland during the 2008 financial crisis.