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.
Read more:
Farage banks on Lloyds in wake of NatWest account closure row
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.
Foreign state investors would be allowed to hold stakes of up to 15% in British national newspapers, ministers are set to announce amid a two-year battle to resolve an impasse over The Daily Telegraph’s ownership.
Sky News has learnt that the Department for Culture, Media and Sport could announce as soon as Thursday that the new limit is to be imposed following a consultation lasting several months.
The decision to set the ownership threshold at 15% follows an intensive lobbying campaign by newspaper industry executives concerned that a permanent outright ban could cut off a vital source of funding to an already-embattled industry.
It would mean that RedBird IMI, the Abu Dhabi state-backed fund which owns an option to take full ownership of the Telegraph titles, would be able to play a role in the newspapers’ future.
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RedBird Capital, the US-based fund, has already said it is exploring the possibility of taking full control of the Telegraph, while IMI would have – if the status quo had been maintained – forced to relinquish any involvement in the right-leaning broadsheets.
One industry source said they had been told to expect a statement from Lisa Nandy, the culture secretary, or another DCMS minister, this week, with the amendment potentially being made in the form of a statutory instrument.
Other than RedBird, a number of suitors for the Telegraph have expressed interest but struggled to raise the funding for a deal.
The most notable of these has been Dovid Efune, owner of The New York Sun, who has been trying for months to raise the £550m sought by RedBird IMI to recoup its outlay.
Another potential offer from Todd Boehly, the Chelsea Football Club co-owner, and media tycoon David Montgomery, has yet to materialise.
RedBird IMI paid £600m in 2023 to acquire a call option that was intended to convert into ownership of the Telegraph newspapers and The Spectator magazine.
That objective was thwarted by a change in media ownership laws – which banned any form of foreign state ownership – amid an outcry from parliamentarians.
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The Spectator was then sold last year for £100m to Sir Paul Marshall, the hedge fund billionaire, who has installed Lord Gove, the former cabinet minister, as its editor.
The UAE-based IMI, which is controlled by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan, extended a further £600m to the Barclays to pay off a loan owed to Lloyds Banking Group, with the balance secured against other family-controlled assets.
Other bidders for the Telegraph had included Lord Saatchi, the former advertising mogul, who offered £350m, while Lord Rothermere, the Daily Mail proprietor, pulled out of the bidding last summer amid concerns that he would be blocked on competition grounds.
The Telegraph’s ownership had been left in limbo by a decision taken by Lloyds Banking Group, the principal lender to the Barclay family, to force some of the newspapers’ related corporate entities into a form of insolvency proceedings.
The newspaper auction is being run by Raine Group and Robey Warshaw.
The DCMS declined to comment.
Burberry, the UK’s only global luxury brand, is to cut around 1,700 jobs worldwide over the next two years after reporting a steep financial loss.
The company lost £66m in pre-tax profit in the year ended in March as luxury goods sales fell across the world and the company weathered an “uncertain” environment and a “difficult macroeconomic backdrop”.
A year earlier, it recorded £383m in profit.
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It’s suffered in recent years with the share price falling to such an extent the business was removed from the FTSE 100, the index of most valuable companies listed on the London Stock Exchange.
Despite the financial performance, the company was upbeat, with chief executive Joshua Schulman saying “I am more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time”.
What cuts are being made?
The retailer did not specify any shop closures – in the past year, it closed 26 and also opened 26 stores – but did highlight shift cuts and consolidations.
“We don’t have a store closing programme, per see,” Mr Schulman told investors
The night shift at Burberry’s Castleford factory will be cut, it proposed, saying the shift has resulted in overproduction.
“Significant” investment in the facility will be made, however, as the ambition is to scale up British production “over time”, Mr Schulman said.
Changes to the retail network across the world will be made with shop staff being scheduled around “peak traffic”.
Burberry will be “realigning” shop staff, he said, “so that we can offer the best service” at the busiest times.
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There will also be a “simplification” of Burberry’s regional structure and a “rebalancing” of central and regional responsibilities to reduce duplication and “accelerate decision making” through the retail network.
But the majority of changes will be made to “office space teams” around the world, the CEO said.
Commercial and creative teams have already been consolidated, Burberry’s annual results said.
What’s gone wrong?
Aside from the global slowdown in luxury goods sales over recession fears, additional headwinds have come in the form of President Trump’s tariffs.
“Clearly, the external environment has become more challenging since mid-February”, Mr Schulman told investors.
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Tariff risks were higher than first planned, the annual results said.
It led the US market to be described by Mr Schulman as “choppy” since February when Mr Trump began announcing tariffs on Mexico, Canada and China, as well as on goods such as steel and cars.
Sales also fell in the Asia Pacific region by 16%, the results showed.
Criticism was levelled at the 2021 British government decision to withdraw VAT refunds for overseas visitors, “which has made the UK the least competitive destination in Europe for tourist shopping”, the results read.
“Business in our UK home market continues to be seriously impacted” by the move.
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