Closure of Farage’s bank account ‘predominantly a commercial decision’, review finds

Published

11 months ago

October 27, 2023

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The independent review into the closure of Nigel Farage’s Coutts account and the discussion of his banking with a journalist by the head of the bank has found “a number of shortcomings” in the closure process.

But law firm Travers Smith, who were commissioned by the board of NatWest to conduct the review, said the closure of Mr Farage‘s account, “was predominantly a commercial decision”.

“Coutts considered its relationship with Mr Farage to be commercially unviable because it was significantly loss-making.”

In response to the key findings of the report, NatWest chairman, Sir Howard Davies, said “a number of serious failings” were set out in the treatment of Mr Farage.

Shortcomings were also identified in how NatWest, which owns Coutts, communicated with the former UKIP and Brexit Party leader and how it treated his confidential information, according to the review.

The finance watchdog, the Financial Conduct Authority (FCA) said potential “regulatory breaches and a number of areas for improvement” were identified.

These include NatWest’s processes on how it considers potential accounts closures and customers complaints as well as the effectiveness of governance mechanisms.

NatWest’s share price fell to more than a two year low on Friday morning despite just published results showing £1.33bn in profit over the three months ending in September, 23% higher than at the same point a year before.

On market open a NatWest share cost 173 pence, a low not seen since February 2021.

The share price fall, from 205.2 pence on Thursday evening, was the biggest fall since the 2016 Brexit vote.

Former chief executive, Dame Alison Rose, exited the state-backed lender after she admitted making a “serious error of judgment” by speaking to a journalist about Farage’s banking at Coutts.

After the news piece was published Mr Farage released the content of a subject access request, which suggested the move was taken partly because his views did not align with the firm’s “values”.

Key findings by Travers Smith are:
• The decision to close the account was lawful and was made in accordance with bank policies and processes.
• Dame Alison Rose played no part in the decision to close the account.
• Other factors were considered in the decision-making process: Coutts thought there could be reputational harm from Mr Farage holding an account these factors did not drive the decision.
• Mr Farage’s stated beliefs were not a determining factor in closing the account but they did support the decision.
• The way the closure was communicated to Mr Farage was broke the bank’s policies and processes, especially by giving reasons to customers when non-financial crime was committed. No adequate reasons were given.

In response, Mr Farage has said:
• “The report’s authors claim it was “predominantly a commercial decision” to close my accounts but, crucially, they also noted that evidence given to them by witnesses in relation to this episode was not entirely consistent.”
• “Travers Smith has taken a very mealy-mouthed approach to this complex issue. The law firm argues that my political views “not aligning with those of the bank” was not in itself a political decision. This is laughable.”
• “Travers Smith did not find “any evidence” that my “pro-Brexit stance were factors in the exit decision”. The word Brexit appeared no less than 86 times in my subject access request”.
• “The letters that were sent to me confirming the closures of my accounts without explanation were sent on a paper headed template usually reserved for those suspected of fraud”.

Earlier this week the Information Commissioner’s Office (ICO) said there were two privacy breaches involved in Dame Alison’s disclosure to BBC News business editor Simon Jack.

A broader FCA review of banks closing accounts on the basis of customers’ political opinion found no evidence of the practice.

However only closures between July 2022 and June 2023 were considered and more work to verify the data supplied by banks was needed as was examination as to why and when they close accounts due to reputational risk.

Business

Trio of property giants oppose Cineworld rent cuts plan

Published

18 hours ago

September 20, 2024

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Trio of property giants oppose Cineworld rent cuts plan

A trio of property giants has lodged a protest against a radical financial restructuring that will see Cineworld imposing steep rent cuts on its landlords.

Sky News has learnt that British Land, Landsec and Legal & General Investment Management all voted against the cinema operator’s restructuring plan this week.

Cineworld has confirmed plans to close six of its UK multiplexes, but documents circulated to creditors show almost 50 others are in categories requiring landlords to agree to revised rent deals in order to ensure their long-term viability.

Although they carry significant influence in the commercial property sector, the trio’s protest will have no impact on the outcome of the company’s proposals, since its owners are now also among its largest creditors, meaning they can effectively force the deal through.

According to documents sent to creditors during the summer, 33 sites – categorised as Class B – “require a reduction of rent to ERV [Estimated Rental Value] Rent in order to place the sites on a viable long-term footing”.

A further 38 of Cineworld’s cinemas would be unaffected, while another 16 Class C1 and C2 leases require reductions to either turnover rent or zero rent in order to render them financially viable.

The documents added that the company did not have sufficient funding to meet a quarterly rent bill on June 24 of £15.9m.

“The UK group did not have sufficient liquidity to make the June 2024 Rent Payment and required further funding from the US Group to meet this liquidity need.

“Absent this funding, the UK Group would have been insolvent on a cashflow basis.”

Cineworld is being advised by AlixPartners.

Other cinema operators are now poised to step in to take over some of Cineworld’s sites.

The company trades from more than 100 locations in Britain, including at the Picturehouse chain, and employs thousands of people.

Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.

Its multibillion-dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.

It delisted from the London Stock Exchange last August, having seen its share price collapse amid fears for its survival.

Cineworld also operates in central and Eastern Europe, Israel and the US.

Business

Consumer confidence slumps following warnings of ‘tough choices’ in budget ahead

Published

1 day ago

September 20, 2024

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Consumer confidence slumps following warnings of 'tough choices' in budget ahead

A long-running measure of consumer confidence has slumped to levels last seen at the start of the year following warnings of “tough choices” ahead in the looming budget.

GfK’s Consumer Confidence Index fell seven points in September to minus 20, with significant drops in predictions for personal finances and the general economy over the coming year.

The report’s authors suggested it was “not encouraging news” for the new government, which has made growing the economy its top priority.

Money latest: Millions already buying mince pies ahead of Christmas

But within weeks of taking the post of chancellor, Rachel Reeves – followed by prime minister Sir Keir Starmer – moved to warn of a legacy £22bn “black hole” in the public finances and said it would result in a painful budget on 30 October.

Among measures already taken include cuts to winter fuel payments, leaving up to 10 million pensioners up to £300 worse off, and inflation-busting public sector pay settlements.

Tax rises and spending cuts are widely expected in next month’s statement to MPs though The Times reported on Friday that a decision by the Bank of England to slow a programme of loss-making bond sales would leave Ms Reeves £10bn better off than she had anticipated.

It added that she was still expected to push forward with her budget plans anyway as a signal of her commitment to fiscal discipline.

The latest snapshot on the public finances, released by the Office for National Statistics (ONS) on Friday showed net borrowing of £13.7bn during August.

Its chief economist, Grant Fitzner, said: “Borrowing was up by over £3bn last month on 2023’s figure, and was the third highest August borrowing on record.

“Central government tax receipts grew strongly, but this was outweighed by higher expenditure, largely driven by benefits uprating and higher spending on public services due to increased running costs and pay.”

Consumer spending accounts for around 60% of the UK economy.

Data released separately on Friday showed a 1% rise in retail sales volumes during August in the wake of weakness, mostly blamed on poor weather, over the previous couple of months.

The ONS said that the increase was driven by supermarket sales, as demand for BBQ food and drinks rose due to the arrival of some sunshine over the key holiday month.

It also credited discounting by clothing retailers.

The data chimes with the latest updates from big retailers, including Next and B&Q’s owner, which have spoken of weak demand for so-called big ticket items such as home furnishings and kitchens respectively.

GfK’s closely-watched survey showed expectations for the general economy over the next 12 months fell by 12 points to -27, while the forecast for personal finances was down nine points to -3.

Commenting on its key measures, including the headline figure, consumer insights director at GfK Neil Bellamy said: “These three measures are key forward-looking indicators so despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK’s new government.”

He added: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.

“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the budget decisions on October 30.”

Business

Whitehall on alert as construction group ISG heads for collapse

Published

1 day ago

September 20, 2024

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Whitehall on alert as construction group ISG heads for collapse

Thousands of construction industry jobs are at risk as ISG, a construction group which builds prisons and police stations, faces imminent collapse.

Sky News has learnt that Whitehall officials are lining up City advisers to work on contingency plans for ISG, which is expected to formally appoint administrators on Friday.

EY is on standby to handle the insolvency proceedings.

Money latest: Millions already buying mince pies ahead of Christmas

Construction industry sources said that government officials were closely monitoring the crisis at ISG, which is expected to be the biggest casualty in the sector since Carillion collapsed in 2018.

ISG employs about 2400 people and counts Apple, Barclays and Google among its private sector clients in the UK.

It is also understood to be involved in construction projects for leading City law firms including Addleshaw Goddard.

One insider said that EY would be appointed as administrator to eight ISG entities, including ISG Central Services and ISG Interior Services.

The accountancy firm is said to have been scrambling to find a buyer for the company after a South African bidder pulled out of talks several days ago.

ISG is owned by Cathexis, a Texan-based investor.

EY and the Cabinet Office declined to comment.