NatWest’s last boardroom announcement was blown apart within eight hours, so Sir Howard Davies should probably wait until the end of the weekend before feeling safe in the post of chair. Life can move quickly at a 39% state-owned bank when Nigel Farage is on the prowl.
Davies has probably escaped the need for an instant resignation only by virtue of the fact that he was going anyway. Plan A, which pre-dates the Coutts fiasco, was for him to leave by July next year for the conventional reason that his nine-year term will be up at that point. An obvious strategy now would be to accelerate the timetable and get out as soon as is practical.
Since the search for a new chair has already been running for a few weeks, it should not take ages to find a new face, even if the pool of likely volunteers may have shrunk over the past week. One suspects Davies will want to be out in the autumn, or at least to have named his successor by then. And it will be amazing if he’s still there by Christmas. Under a new chair the necessary broader overhaul of the boardroom after the incompetence of the past month can begin.
Why not go immediately? Davies said his rationale was to ensure “stability”, an explanation that should not be dismissed out of hand. Somebody has to chair the UK’s largest commercial lender and third-largest provider of mortgages. Shoving another of the current non-executives into the seat wouldn’t improve matters. The whole board is compromised by the rotten but unanimous decision to try to cling to the chief executive, Dame Alison Rose, even though she had clearly breached the banking golden rule on client confidentiality.
On that decision, and then the U-turn in the middle of the night, Davies didn’t add much to the sum of knowledge. The political reaction to the board’s backing for Rose had made her position “untenable”, he said, but the mystery is why Davies and co didn’t anticipate the government’s response.
Given the stakes, the size of the state’s holding and the political temperature, it would have been logical for Davies to have nailed down support from Downing Street – with documentary evidence, just in case – before pressing the button on a “full confidence in Rose” statement. NatWest and the government surely had a mutual interest in avoiding the chaos that transpired.
“I took soundings, as you would expect, of various stakeholders in the bank about the situation, about the way in which Alison Rose was reviewed, and that formed part of the background to our decision,” Davies said.
Those words can be read several ways. Were the “soundings” unclear? Did ministers lean one way and then jump the other? Did the board decide its job was to form its view? Davies, quite properly, said he was “not seeking to associate anybody else” with the board’s statement, but the full story of the conversations between NatWest and the government on Monday and Tuesday this week has yet to emerge. Recollections may vary, as they say.
The other mystery is why Davies, seemingly, did not grasp the scale of the looming crisis at an early stage – when Farage first made his explosive accusation that Coutts had ditched him for his political views.
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True, the board can’t interfere in day-to-day operational decisions, but by the time the misleading BBC story, referencing “a source familiar with Coutts’s move”, appeared on 4 July, the potential for serious trouble was screamingly obvious. It is very definitely a chair’s job to stick their nose in at that point. Instead, the board prolonged its own agony, even though NatWest must have known Farage was likely to publish the damaging Coutts document he had obtained via a subject access request.
It’s a terrible end to Davies’s tenure at NatWest – a period that, actually, was otherwise mostly successful. In financial and operational terms, the bank was in a far worse position eight years ago. Just don’t linger on the way out.