NatWest braced for showdown over former CEO’s payoff
NatWest Group is preparing to cancel millions of pounds in bonuses and share awards earmarked for its former chief executive following a probe into the closure of the former UKIP leader Nigel Farage’s bank accounts.
Sky News has learnt that NatWest, in which the government remains the single-largest shareholder, wants to resolve the issue of Dame Alison Rose’s payoff ahead of its third-quarter results on 27 October.
This weekend, City sources said final decisions had yet to be taken by the bank’s board, chaired by Sir Howard Davies, and cautioned that the complexity of the process meant that finalising its response could yet slip into November.
One said there was a desire to publish the details as soon as the end of next week, although they conceded that that target was “highly ambitious”.
They added that until decisions were formally taken by the bank’s directors, the final outcome of their deliberations would remain uncertain.
According to a public filing by NatWest in August, Dame Alison has been receiving her annual £2.4m package comprising base salary, pension contribution and a share-based fixed-pay allowance since her departure at the end of July.
She is also eligible to be considered for a pro rata portion of the £2.9m annual bonus and long-term share awards that made up the remainder of her total maximum pay package of £5.3m.
In addition, she holds roughly 2.5 million unvested shares in NatWest, which at Friday’s closing share price of 225.9p were worth £5.65m.
That amounts to a theoretical total of nearly £11m, although the fact that Dame Alison left midway through 2023 means she would only have been eligible for just over half of the £2.9m in annual variable pay.
‘Inconceivable’
One source close to the process said it was “inconceivable” that she would be awarded any discretionary pay for 2023, and said it was “highly likely” that the bank would seek to cancel the unvested shares, although they admitted that the latter move, if implemented, could become the subject of a legal challenge.
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The source added that the rest of the £2.4m due to be paid to Dame Alison during her 12-month notice period was also now in question, although it was unclear whether it would be curtailed.
Exit package
The government is expected to be consulted on the final terms of her exit package in the next fortnight.
One Whitehall insider said this weekend they had made it clear that Dame Alison should receive “only the minimum possible payoff”.
Dame Alison left the bank by mutual consent – where she had been widely regarded to be doing a competent rebuilding job 15 years after its £45.5bn taxpayer bailout – after acknowledging that she had inaccurately briefed a BBC journalist about the reasons for closing Mr Farage’s Coutts accounts.
The report, which the broadcaster was forced to amend, suggested that the former UKIP leader did not meet its commercial criteria.
It subsequently emerged after he submitted a subject access request that his political views had been instrumental in the decision.
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July: ’10 banks turned me down’ – Farage
Dame Alison has been replaced on an interim basis by Paul Thwaite, formerly the head of its commercial business.
A report compiled by the law firm Travers Smith examining the “exit process” for Mr Farage and the disclosure of information about his banking arrangements to the BBC was submitted to the NatWest board earlier this month.
A second phase of the probe, assessing the closure of Coutts accounts during the last two years, is due to be completed by the end of this month.
A NatWest spokesperson said this weekend: “In line with our previous commitments, the key findings of the independent review and the recommendations will be considered by the board.
“These, along with the [group’s] response, will be published in due course.
“In the meantime we will not comment on any speculation.”
A spokesman for the former NatWest chief declined to comment.
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Dame Alison, the first woman to run one of Britain’s big four London-listed banks, had initially sought to draw a line under the row with Mr Farage by apologising to him, and then by foregoing her bonus for this year.
Within hours, however, signals from Downing Street that it had lost confidence in her leadership prompted the bank to convene an emergency board meeting to rubber-stamp her departure.
Sky News revealed on Friday that Mr Farage had moved his personal banking arrangements to Lloyds, Britain’s biggest high street lender.
Sir Howard is due to step down next year and will be replaced by Rick Haythornthwaite, the former MasterCard chairman who currently chairs Ocado Group, the online grocer.
Business
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
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Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
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