NatWest/Alison Rose: culture wars come to the City

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It is very rare for a business leader in a developed democracy to be ousted by the state. Dame Alison Rose, who has stepped down as chief executive of NatWest, joins a select group that includes Tony Hayward of BP, Barclays’ Bob Diamond and Stephen Hester of Royal Bank of Scotland.

The office of UK prime minister Rishi Sunak pushed Rose out after the board had, in familiarly fateful words, expressed its “full confidence”. The government holds a 39 per cent stake.

Culture wars have come to the City, thanks to Nigel Farage. The former party leader, instrumental in the UK’s exit from the EU, hit back after NatWest subsidiary Coutts closed his bank account on partly political grounds.

The closure was wrong. But the controversy has erupted in a territory where other corporate stances are easier to defend. These include Disney’s battle with Florida governor Ron DeSantis over LGBTQ+ rights and a US customer boycott of a Budweiser beer brand over the same issue.

Many corporations in the US and western Europe have endorsed liberal, inclusive policies because they believe in them or as an inexpensive means of appearing progressive.

All three battles show there can be a real cost. Rose was a good operational banker, if politically naive. NatWest shares dropped more than 3 per cent to about £2.40. That is under half the average price the government paid for stock in financial crisis-era bailouts of RBS, as NatWest was known back then.

The equity should fall further if chair Howard Davies is ousted, as enemies hope. That would leave the lender destabilised, despite the rapid appointment of commercial banker Paul Thwaite as interim chief executive.

One failure of commission and one of omission sealed Rose’s fate. She misled a BBC journalist over the extent to which Farage’s account closure was politically motivated. And she should have been aware of insulting language describing Farage in internal documents and changed it. The phrase “disingenuous grifter” will haunt the rest of her career.

Ideology rather than financial materiality will also matter more as other “politically exposed persons” seek information on account closures using the disclosure requests deployed by Farage. There must be a good few of these.

NatWest banks thousands of PEPs. Sir Howard and colleagues can expect no summer lull this year, unless they too lose their jobs.

The Lex team is interested in hearing more from readers. Please tell us what you think about Alison Rose’s departure in the comments section below.