NatWest has said it will make a fresh £190m payout to its largest shareholder, the UK government, days after Downing Street triggered the resignation of chief executive Alison Rose amid a row over Nigel Farage’s accounts.
The crisis-hit group said it was planning to pay dividends worth £500m to its investors after another strong quarter in which pre-tax profits rose by a higher than expected 27% to £1.8bn in the three months to June. That was compared with £1.4bn a year earlier, as the bank benefited from rising interest rates that allowed it to charge borrowers more for loans and mortgages.
The shareholder payout will benefit the UK government, which still holds a 38.5% stake in the lender after its £45bn state bailout during the 2008 financial crisis. NatWest also announced a £500m share buyback on Friday morning, but that will only benefit investors whose shares are traded on the public stock market.
It comes during a chaotic week for NatWest Group after the departure of Rose and the ousting of Peter Flavel, the boss of its private bank, Coutts.
Their departures followed interventions by the chancellor and the prime minister this week, who made it clear they wanted change at the top of the bank. Rose resigned on Wednesday after confirming she had been the source of a BBC news report about Coutts dropping Farage as a customer, in an apparent breach of client confidentiality. Flavel stepped down a day later.
The NatWest chair, Sir Howard Davies, said: “The political reaction to that was such that Alison and I then concluded, and the board supported the view, that her position was then untenable. She would be running the bank in the face of very difficult headwinds.”.
Responding to speculation that he might become the third senior figure to exit NatWest in a week, Davies insisted he was staying put. The chair, who had already announced he would retire by next summer, said this would ensure “stability” and an “orderly transition” for the bank, which has already started the hunt for his successor.
“I serve at shareholders’ behest, but my intention is to continue to lead the board and ensure that the bank remains sound, stable and able to support our 19 million customers,” Davies told journalists during a media call on Friday morning.
The bank also boosted its bonus pool by 11% to £217m, a figure that is likely to grow further before payments are made to bankers in the spring.
NatWest has yet to confirm whether either Rose or Flavel will receive exit payments, but Davies said discussions would only begin after the bank completed an independent review into the circumstances surrounding the closure of Farage’s Coutts accounts.
NatWest’s chief financial officer, Katie Murray, commended the bank’s “strong performance” and said it had been able to “continue lending to our customers and delivering sustainable returns and distributions to our shareholders, even in the current uncertain environment”.
It came as new figures showed that more businesses in England and Wales collapsed in the second quarter of the year than in any three month period since 2009.
The Insolvency Service said the number of company failures reached 6,342 in the three months to the end of June. That was 9% higher than the previous quarter and 13% higher than the same period last year. It means that more than 13,000 companies have collapsed since the start of the year.
Business groups have blamed high inflation, rising rents and the cost of living crisis affecting customers for the increase in the number of firms going to the wall.
In the last year the construction industry registered the largest number of insolvencies, closely followed by the wholesale and retail trade and hotels and restaurants. Manufacturing made up 8% of cases.
“More and more businesses are struggling to make ends meet due to increased overheads and their customers having less money to spend,” Sam Fenwick, a partner at the law firm Wedlake Bell, said. “Directors are increasingly throwing in the towel, particularly in smaller businesses,” he added.
