The decision of NatWest subsidiary Coutts to close Nigel Farage’s bank account backfired badly, with NatWest shares tumbling last week after chief executive Alison Rose was forced to resign.
Rose’s resignation was inevitable. By briefing the BBC on Farage’s relationship with the bank, she breached client confidentiality.
The fact she gave the impression Farage’s account was closed for solely commercial reasons, when political considerations clearly played a part, only compounded the problem. The falling share price prompted gleeful reactions from some, who view this as an obvious case of go woke, go broke.
However, Coutts could be forgiven for not wanting Farage as a customer. Politically-exposed persons, or PEPs, can be a headache for banks, requiring regular and costly client reviews. Banks may be prepared to incur some reputational risk if a particular client is a big source of revenue, but this wasn’t the case with Farage, who had paid off his mortgage with Couttts.
You can make a case that Coutts was right to consider cutting ties with Farage. The problem wasn’t so much its decision, but the execution of that decision, leading to a costly mess of NatWest’s own making.
