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.
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‘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.
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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0:43
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.
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.
Global financial markets have been on a rollercoaster ride over the past few days, but now, with President Donald Trump having paused his “retaliatory” tariffs, the situation should stabilise.
Here, we outline how the pound in your pocket has been affected.
Stock markets, bonds and currencies moved sharply after Mr Trump put a 90-day pause on tariffs other than the base 10% tax slapped on almost all imports to the US. China still faces a levy of 125% on the goods it exports to the US.
But there have still been some impactful changes since his so-called “liberation day” tariff announcement last week.
So, what’s happened?
Well, last week two more interest rate cuts were expected by the end of this year, but now traders are pricing in three cuts by the Bank of England.
Borrowing will become cheaper as the interest rate is now anticipated to be brought down more than previously thought, to 3.75% by the end of 2025 from the current 4.5%.
It’s not exactly for a good reason, though. The trade war means the UK economy is forecast to grow less.
This lower growth is what’s making observers think the Bank will cut rates sooner – making borrowing cheaper can lead to more spending. Increased spending can stimulate economic growth.
What does this all mean for you?
Some debts, like credit card bills, will become a bit cheaper.
Mortgages
Crucially for anyone soon to re-fix their rate, this means mortgage costs are falling.
Already, the typical two and five-year fixed rate deals are coming down, according to data from financial information company Moneyfacts.
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1:42
Trump’s tariffs: What you need to know
After weeks where the average rate would fall only once or twice, there have been larger and daily falls, the data shows.
As of Thursday, the typical rate for a five-year deal is 5.14%, and 5.29% for the average two-year fixed mortgage.
If the interest rate expectations remain, by the end of the year, the average two-year fixed mortgage rate will fall to 4.3% if a person is borrowing 75% of the property’s value, according to analysts at Pantheon Macroeconomics.
Filling up your car
Another positive that’s motivated by a negative is the reduced fuel cost to the motorist of filling up their vehicle.
The oil price fell due to rising fears of a recession in the world’s biggest economy. Now that those concerns have somewhat subsided, the oil price has remained comparatively low at $63.75 for a barrel of the benchmark Brent crude.
It’s far below the average price of $80 from last year.
This lower cost is likely to filter down to cheaper prices at the pump within days as the sharp oil price drops hit at the end of last week.
Lower oil costs could help bring down costs overall, lowering inflation, as oil is still used in many parts of the supply chain.
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Lower interest rates mean falling savings rates, so savers can expect to get less of a return in the coming months.
Anyone with a stocks and shares ISA (Individual Savings Account) is likely to get a shock when they see the decline in their returns.
Image: A display shows the sharp rise of the Nikkei stock index in Tokyo. Pic: AP
Holidays
It’s not the best time to be heading off on a trip to a country that uses the euro. The pound hasn’t strayed far from buying €1.16, a low last seen in August.
It means your pound doesn’t go as far, as you’re getting less euro.
Against the dollar, however, sterling has risen to $1.29.
The exchange rate had been higher in the immediate wake of Mr Trump’s tariff announcement as the dollar value sank. At that point, you could briefly have bought $1.32 for a pound.
Supermarket shopping
Helpfully, the UK’s biggest and most popular UK supermarket, Tesco, updated us that it expects tariffs will have a “relatively small impact”.
This is the term used periodically to describe investors who push back against what are perceived to be irresponsible fiscal or monetary policies by selling government bonds, in the process pushing up yields, or implied borrowing costs.
Most of the focus on markets in the wake of Donald Trump’s imposition of tariffs on the rest of the world has, in the last week, been about the calamitous stock market reaction.
This was previously something that was assumed to have been taken seriously by Mr Trump.
During his first term in the White House, the president took the strength of US equities – in particular the S&P 500 – as being a barometer of the success, or otherwise, of his administration.
Image: Donald Trump in the Oval Office today. Pic: Reuters
He had, over the last week, brushed off the sour equity market reaction to his tariffs as being akin to “medicine” that had to be taken to rectify what he perceived as harmful trade imbalances around the world.
But, as ever, it is the bond markets that have forced Mr Trump to blink – and, make no mistake, blink is what he has done.
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To begin with, following the imposition of his tariffs – which were justified by some cockamamie mathematics and a spurious equation complete with Greek characters – bond prices rose as equities sold off.
That was not unusual: big sell-offs in equities, such as those seen in 1987 and in 2008, tend to be accompanied by rallies in bonds.
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17:12
What it’s like on the New York stock exchange floor
However, this week has seen something altogether different, with equities continuing to crater and US government bonds following suit.
At the beginning of the week yields on 10-year US Treasury bonds, traditionally seen as the safest of safe haven investments, were at 4.00%.
By early yesterday, they had risen to 4.51%, a huge jump by the standards of most investors. This is important.
The 10-year yield helps determine the interest rate on a whole clutch of financial products important to ordinary Americans, including mortgages, car loans and credit card borrowing.
By pushing up the yield on such a security, the bond investors were doing their stuff. It is not over-egging things to say that this was something akin to what Liz Truss and Kwasi Kwarteng experienced when the latter unveiled his mini-budget in October 2022.
And, as with the aftermath to that event, the violent reaction in bonds was caused by forced selling.
Now part of the selling appears to have been down to investors concluding, probably rightly, that Mr Trump’s tariffs would inject a big dose of inflation into the US economy – and inflation is the enemy of all bond investors.
Part of it appears to be due to the fact the US Treasury had on Tuesday suffered the weakest demand in nearly 18 months for $58bn worth of three-year bonds that it was trying to sell.
But in this particular case, the selling appears to have been primarily due to investors, chiefly hedge funds, unwinding what are known as ‘basis trades’ – in simple terms a strategy used to profit from the difference between a bond priced at, say, $100 and a futures contract for that same bond priced at, say, $105.
In ordinary circumstances, a hedge fund might buy the bond at $100 and sell the futures contract at $105 and make a profit when the two prices converge, in what is normally a relatively risk-free trade.
So risk-free, in fact, that hedge funds will ‘leverage’ – or borrow heavily – themselves to maximise potential returns.
The sudden and violent fall in US Treasuries this week reflected the fact that hedge funds were having to close those trades by selling Treasuries.
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1:20
Trump freezes tariffs at 10% – except China
Confronted by a potential hike in borrowing costs for millions of American homeowners, consumers and businesses, the White House has decided to rein back its tariffs, rightly so.
It was immediately rewarded by a spectacular rally in equity markets – the Nasdaq enjoyed its second-best-ever day, and its best since 2001, while the S&P 500 enjoyed its third-best session since World War Two – and by a rally in US Treasuries.
The influential Wall Street investment bank Goldman Sachs immediately trimmed its forecast of the probability of a US recession this year from 65% to 45%.
Of course, Mr Trump will not admit he has blinked, claiming last night some investors had got “a little bit yippy, a little bit afraid”.
And it is perfectly possible that markets face more volatile days ahead: the spectre of Mr Trump’s tariffs being reinstated 90 days from now still looms and a full-blown trade war between the US and China is now raging.
But Mr Trump has blinked. The bond vigilantes have brought him to heel. This president, who by his aggressive use of emergency executive powers had appeared to be more powerful than any of his predecessors, will never seem quite so powerful again.
Rupert Murdoch’s News Corporation is in advanced talks to take a stake in a London-listed marketing specialist backed by Lord Ashcroft, the former Conservative Party treasurer.
Sky News has learnt that the media tycoon’s British subsidiary, News UK, is close to agreeing a deal to combine its influencer marketing division – which is called The Fifth – with Brave Bison, an acquisitive group run by brothers Oli and Theo Green.
Sources said the deal could be announced as early as Thursday morning.
News UK publishes The Sun and The Times, among other media assets.
If completed, the transaction would involve Brave Bison acquiring The Fifth with a combination of cash and shares that would result in News UK becoming one of its largest shareholders.
The purchase price is said to be in the region of £8m.
The Fifth has worked with the television host and model Maya Jama on a campaign for the energy drink Lucozade, and Amelia Dimoldenberg, the YouTube star.
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Its other clients include Samsung and Tommee Tippee.
The deal will be the third struck by Brave Bison this year, with the previous transactions including the purchase of Engage Digital, a key digital partner to sporting properties including the Men’s T20 Cricket World Cup.
The Green brothers took over the Brave Bison in 2020, and have overseen a sharp strategic realignment and improvement in its performance.
In 2023, it bought the podcaster and entrepreneur Steven Bartlett’s social media and influencer agency, SocialChain.
In total, the company has struck six takeover deals since the Greens assumed control.
At Wednesday’s stock market close, Brave Bison had a market capitalisation of about £31m.