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NatWest, Meta, BT, BMW, ITV and Unilever have joined a growing list of big corporate names in terminating their membership of the CBI or suspending collaboration due to the scandal engulfing the business lobby group.

The rush for the exit door came after the Guardian newspaper reported that a second woman had made a rape allegation – against two male CBI co-workers – building on the series of historic serious misconduct claims to have engulfed the body in recent weeks.

A NatWest Group spokesperson said: “Following careful consideration, and having previously paused all activity, NatWest Group has today withdrawn its membership of the CBI with immediate effect.

“British business needs a strong representative voice. Given the extremely serious allegations made against the CBI, we no longer have confidence that it can fulfil this role at the present time.”

A spokesperson for Facebook owner Meta also confirmed that they had paused engagement with the CBI while the investigation is ongoing.

BT Group said: “In light of the appalling allegations made, BT Group has decided to suspend its membership of the CBI with immediate effect.”

FILE PHOTO: FILE PHOTO: The logo of Meta Platforms' business group is seen in Brussels, Belgium December 6, 2022. REUTERS/Yves Herman/File Photo/File Photo
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Facebook owner Meta has paused engagement with the CBI while the investigation is ongoing

Carmaker BMW joined the exodus late on Friday, saying they were “concerned by the allegations relating to the CBI. The Group has therefore decided to terminate its membership with immediate effect.”

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They were joined by Rolls-Royce, who said: “In light of the recent allegations, which are deeply concerning, we are suspending all interaction with the CBI with immediate effect.

“We will await the completion of its ongoing investigations before making a final decision on our membership.”

A spokesperson for ITV told Sky News that the broadcaster “will pause engagement with the CBI with immediate effect and will not renew our contract with them.”

Unilever also confirmed that they were severing ties, saying: “Due to the very serious and ongoing allegations, we can confirm that we have suspended our membership of the CBI.”

The John Lewis Partnership had earlier cited “further very serious and ongoing allegations” as the reason for quitting the organisation.

It’s not exaggerating to call this an existential crisis for the CBI


Sky News Author Ian King Business Presenter

Ian King

Business presenter

@iankingsky

If one were to compile a list of some of the most prestigious blue-chip UK employers, it would probably include NatWest, BP, Shell, Aviva, the John Lewis Partnership, Virgin Media O2, WPP, Phoenix Group, BT, PwC, EY, Schroders and AstraZeneca.

Were that list to be enhanced with prestigious foreign-owned businesses that are major employers in the UK, and which enjoy a meaningful UK presence, it would probably extend to take in names such as BMW, Mastercard, Ford, Fidelity, Jaguar Land Rover and JP Morgan.

That underlines the crisis now engulfing the CBI. All of those companies have either paused their engagement with the employers organisation or cancelled their membership altogether in the wake of the latest allegations consuming the CBI.

It was bad enough that the CBI felt obliged to dismiss its former director-general, Tony Danker, amid allegations of workplace misconduct.

What made it worse was a report in The Guardian, the newspaper that first published details of the allegations against Mr Danker, that a former CBI employee had filed a complaint that she was raped at a party hosted by the organisation back in 2019.

That has now been made worse still by a second woman coming forward to say she had been raped by colleagues while working for the CBI.

It is not now over-exaggerating to say that this has become an existential crisis for the CBI.

Read the full analysis here

Insurer Aviva was first to reveal its hand on Friday, just moments after Sky News reported that abrdn, the FTSE 100 fund manager, was also considering its position with the organisation.

Fellow insurers Phoenix Group and Zurich swelled the exodus alongside the industry body the ABI while Virgin Media O2 also confirmed it had terminated its membership.

Asda, accountancy giant PwC and National Grid later confirmed they had suspended all activity with the business lobby group while Lloyds Banking Group was also understood to have done the same.

An AstraZeneca spokesperson said: “Following these grave allegations, we have decided to pause our engagements with the CBI while these are investigated.”

“In light of the very serious allegations made, and the CBI‘s handling of the process and response, we believe the CBI is no longer able to fulfil its core function – to be a representative voice of business in the UK,”, Aviva said.

“We have therefore regrettably terminated our membership with immediate effect.”

CBI president Brian McBride had previously admitted that a “handful” of its 190,000 members had departed since the crisis began.

Brian McBride
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Brian McBride was elected president of the CBI in June last year

They are known to have included, before Friday, the British Insurance Brokers’ Association.

Shell is understood to have suspended dealings with the CBI last week.

The potential departure of abrdn would be acutely embarrassing for Mr McBride personally as he currently serves as a non-executive director at the firm.

Sky’s City editor Mark Kleinman reported that the board had been debating whether to terminate its status as a CBI member once a CBI-commissioned review of sexual abuse allegations against staff members had been completed.

A source said that alternatively it could decide not to renew its membership when it expires at the end of this year.

A string of blue-chip companies, including Rolls-Royce and Marks & Spencer, have raised public concerns about the crisis.

Last week, the CBI sacked Tony Danker, its director general, after saying it had lost confidence in his ability to lead the organisation amid claims about his personal conduct.

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Tony Danker was sacked on 11 April

Mr Danker told the BBC this week he had been “thrown under the bus” and said the allegations against him did not merit his dismissal.

He also apologised for making a number of CBI employees “uncomfortable”.

Business leaders have lined up in recent weeks to denounce its handling of the crisis, saying it had been too slow to apologise and had erred by appointing an insider, Rain Newton-Smith, as Mr Danker’s successor.

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Three employees have been suspended, while a police investigation is under way.

The CBI said this week that the second phase of an inquiry by the law firm Fox Williams would conclude imminently.

“The board will be communicating its response to this and other steps we are taking to bring about the wider change that is needed early next week,” the group said on Thursday.

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Chair candidates battle to check in at Premier Inn-owner Whitbread

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Chair candidates battle to check in at Premier Inn-owner Whitbread

Two chairs of FTSE-100 companies are vying to succeed Adam Crozier at the top of Whitbread, the London-listed group behind the Premier Inn hotel chain.

Sky News has learnt that Christine Hodgson, who chairs water company Severn Trent, and Andrew Martin, chair of the testing and inspection group Intertek, are the leading contenders for the Whitbread job.

Mr Crozier, who has chaired the leisure group since 2018, is expected to step down later this year.

The search, which has been taking place for several months, is expected to conclude in the coming weeks, according to one City source.

Ms Hodgson has some experience of the leisure industry, having served on the board of Ladbrokes Coral Group until 2017, while Mr Martin was a senior executive at the contract caterer Compass Group and finance chief at the travel agent First Choice Holidays.

Under Mr Crozier’s stewardship, Whitbread has been radically reshaped, selling its Costa Coffee subsidiary to The Coca-Cola Company in 2019 for nearly £4bn.

The company has also seen off an activist campaign spearheaded by Elliott Advisers, while Mr Crozier orchestrated the appointment of Dominic Paul, its chief executive, following Alison Brittain’s retirement.

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It said last year that it sees potential to grow the network from 86,000 UK bedrooms to 125,000 over the next decade or so.

Mr Crozier is one of Britain’s most seasoned boardroom figures, and now chairs BT Group and Kantar, the market research and data business backed by Bain Capital and WPP Group.

He previously ran the Football Association, ITV and – in between – Royal Mail Group.

On Friday, shares in Whitbread closed at £25.41, giving the company a market capitalisation of about £4.5bn.

Whitbread declined to comment this weekend.

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Bank chiefs to Reeves: Ditch ring-fencing to boost UK economy

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Bank chiefs to Reeves: Ditch ring-fencing to boost UK economy

The bosses of four of Britain’s biggest banks are secretly urging the chancellor to ditch the most significant regulatory change imposed after the 2008 financial crisis, warning her its continued imposition is inhibiting UK economic growth.

Sky News has obtained an explosive letter sent this week by the chief executives of HSBC Holdings, Lloyds Banking Group, NatWest Group and Santander UK in which they argue that bank ring-fencing “is not only a drag on banks’ ability to support business and the economy, but is now redundant”.

The CEOs’ letter represents an unprecedented intervention by most of the UK’s major lenders to abolish a reform which cost them billions of pounds to implement and which was designed to make the banking system safer by separating groups’ high street retail operations from their riskier wholesale and investment banking activities.

Their request to Rachel Reeves, the chancellor, to abandon ring-fencing 15 years after it was conceived will be seen as a direct challenge to the government to take drastic action to support the economy during a period when it is forcing economic regulators to scrap red tape.

It will, however, ignite controversy among those who believe that ditching the UK’s most radical post-crisis reform risks exacerbating the consequences of any future banking industry meltdown.

In their letter to the chancellor, the quartet of bank chiefs told Ms Reeves that: “With global economic headwinds, it is crucial that, in support of its Industrial Strategy, the government’s Financial Services Growth and Competitiveness Strategy removes unnecessary constraints on the ability of UK banks to support businesses across the economy and sends the clearest possible signal to investors in the UK of your commitment to reform.

“While we welcomed the recent technical adjustments to the ring-fencing regime, we believe it is now imperative to go further.

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“Removing the ring-fencing regime is, we believe, among the most significant steps the government could take to ensure the prudential framework maximises the banking sector’s ability to support UK businesses and promote economic growth.”

Work on the letter is said to have been led by HSBC, whose new chief executive, Georges Elhedery, is among the signatories.

His counterparts at Lloyds, Charlie Nunn; NatWest’s Paul Thwaite; and Mike Regnier, who runs Santander UK, also signed it.

While Mr Thwaite in particular has been public in questioning the continued need for ring-fencing, the letter – sent on Tuesday – is the first time that such a collective argument has been put so forcefully.

The only notable absentee from the signatories is CS Venkatakrishnan, the Barclays chief executive, although he has publicly said in the past that ring-fencing is not a major financial headache for his bank.

Other industry executives have expressed scepticism about that stance given that ring-fencing’s origination was largely viewed as being an attempt to solve the conundrum posed by Barclays’ vast investment banking operations.

The introduction of ring-fencing forced UK-based lenders with a deposit base of at least £25bn to segregate their retail and investment banking arms, supposedly making them easier to manage in the event that one part of the business faced insolvency.

Banks spent billions of pounds designing and setting up their ring-fenced entities, with separate boards of directors appointed to each division.

More recently, the Treasury has moved to increase the deposit threshold from £25bn to £35bn, amid pressure from a number of faster-growing banks.

Sam Woods, the current chief executive of the main banking regulator, the Prudential Regulation Authority, was involved in formulating proposals published by the Sir John Vickers-led Independent Commission on Banking in 2011.

Legislation to establish ring-fencing was passed in the Financial Services Reform (Banking) Act 2013, and the regime came into effect in 2019.

In addition to ring-fencing, banks were forced to substantially increase the amount and quality of capital they held as a risk buffer, while they were also instructed to create so-called ‘living wills’ in the event that they ran into financial trouble.

The chancellor has repeatedly spoken of the need to regulate for growth rather than risk – a phrase the four banks hope will now persuade her to abandon ring-fencing.

Britain is the only major economy to have adopted such an approach to regulating its banking industry – a fact which the four bank chiefs say is now undermining UK competitiveness.

“Ring-fencing imposes significant and often overlooked costs on businesses, including SMEs, by exposing them to banking constraints not experienced by their international competitors, making it harder for them to scale and compete,” the letter said.

“Lending decisions and pricing are distorted as the considerable liquidity trapped inside the ring-fence can only be used for limited purposes.

“Corporate customers whose financial needs become more complex as they grow larger, more sophisticated, or engage in international trade, are adversely affected given the limits on services ring-fenced banks can provide.

“Removing ring-fencing would eliminate these cliff-edge effects and allow firms to obtain the full suite of products and services from a single bank, reducing administrative costs”.

In recent months, doubts have resurfaced about the commitment of Spanish banking giant Santander to its UK operations amid complaints about the costs of regulation and supervision.

The UK’s fifth-largest high street lender held tentative conversations about a sale to either Barclays or NatWest, although they did not progress to a formal stage.

HSBC, meanwhile, is particularly restless about the impact of ring-fencing on its business, given its sprawling international footprint.

“There has been a material decline in UK wholesale banking since ring-fencing was introduced, to the detriment of British businesses and the perception of the UK as an internationally orientated economy with a global financial centre,” the letter said.

“The regime causes capital inefficiencies and traps liquidity, preventing it from being deployed efficiently across Group entities.”

The four bosses called on Ms Reeves to use this summer’s Mansion House dinner – the City’s annual set-piece event – to deliver “a clear statement of intent…to abolish ring-fencing during this Parliament”.

Doing so, they argued, would “demonstrate the government’s determination to do what it takes to promote growth and send the strongest possible signal to investors of your commitment to the City and to strengthen the UK’s position as a leading international financial centre”.

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Post Office to unveil £1.75bn banking deal with big British lenders

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Post Office to unveil £1.75bn banking deal with big British lenders

The Post Office will next week unveil a £1.75bn deal with dozens of banks which will allow their customers to continue using Britain’s biggest retail network.

Sky News has learnt the next Post Office banking framework will be launched next Wednesday, with an agreement that will deliver an additional £500m to the government-owned company.

Banking industry sources said on Friday the deal would be worth roughly £350m annually to the Post Office – an uplift from the existing £250m-a-year deal, which expires at the end of the year.

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The sources added that in return for the additional payments, the Post Office would make a range of commitments to improving the service it provides to banks’ customers who use its branches.

Banks which participate in the arrangements include Barclays, HSBC, Lloyds Banking Group, NatWest Group and Santander UK.

Under the Banking Framework Agreement, the 30 banks and mutuals’ customers can access the Post Office’s 11,500 branches for a range of services, including depositing and withdrawing cash.

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The service is particularly valuable to those who still rely on physical cash after a decade in which well over 6,000 bank branches have been closed across Britain.

In 2023, more than £10bn worth of cash was withdrawn over the counter and £29bn in cash was deposited over the counter, the Post Office said last year.

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A new, longer-term deal with the banks comes at a critical time for the Post Office, which is trying to secure government funding to bolster the pay of thousands of sub-postmasters.

Reliant on an annual government subsidy, the reputation of the network’s previous management team was left in tatters by the Horizon IT scandal and the wrongful conviction of hundreds of sub-postmasters.

A Post Office spokesperson declined to comment ahead of next week’s announcement.

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