UK (Parliament Politic Magazine) – NatWest has announced its intention to make a substantial payout of £190m to its largest shareholder, the UK government. This move comes in the wake of the recent resignation of chief executive Alison Rose, following a controversy surrounding Nigel Farage’s accounts.
Despite the ongoing crisis, the bank has reported impressive financial results, with pre-tax profits exceeding expectations.
In the three months leading up to June, profits rose by a remarkable 27% to £1.8bn, compared to the previous year’s £1.4bn. This surge in profits can be attributed to the bank capitalizing on higher interest rates, enabling them to charge borrowers more for loans and mortgages.
Payout To The Shareholders Will Benefit The UK Government
The payout to shareholders will primarily benefit the UK government, which still maintains a significant 38.5% stake in NatWest. This stake was acquired through a £45bn state bailout during the 2008 financial crisis.
Additionally, NatWest has also announced a share buyback program worth £500m. However, this buyback will exclusively benefit investors whose shares are publicly traded on the stock market.
By taking these measures, NatWest aims to strengthen its relationship with shareholders and demonstrate its commitment to delivering value. Despite recent challenges, the bank remains focused on achieving sustainable growth and maintaining its position as a leading financial institution.
NatWest Group See A Rise In Profits
It has been a tumultuous week for NatWest Group, marked by the departure of Alison Rose and the removal of Peter Flavel, the CEO of its private bank, Coutts. These significant changes were prompted by interventions from the chancellor and the prime minister, who expressed their desire for a leadership shake-up within the bank.
Rose resigned on Wednesday after admitting to leaking information to a BBC news report about Coutts severing ties with Farage as a client, a clear violation of client confidentiality. Flavel followed suit the next day.
Sir Howard Davies, the chair of NatWest, commented on the situation, stating, “The political response to this incident was so severe that Alison and I, along with the board, concluded that her position had become untenable. She would be navigating the bank through treacherous waters.”
Addressing rumors that he might also be leaving NatWest, Davies firmly stated his commitment to remaining in his role. Despite his previous announcement of retirement by next summer, he emphasized the importance of providing stability and ensuring an orderly transition for the bank, which has already initiated the search for his successor.
NatWest Sees A Significant Boost In Its Bonus Pool
In addition to its financial success, the bank has also seen a significant boost in its bonus pool, which has increased by 11% to reach an impressive £217m. This figure is projected to grow even further before payments are made to bankers in the upcoming spring season.
While NatWest has not yet confirmed whether Rose or Flavel will receive exit payments, the bank has made it clear that discussions will only commence once an independent review into the closure of Farage’s Coutts accounts is completed. This demonstrates the bank’s commitment to thorough investigation and transparency.
Katie Murray, NatWest’s esteemed chief financial officer, has commended the bank’s remarkable performance, emphasizing its ability to continue lending to customers and generate sustainable returns and distributions to shareholders, even amidst the current uncertain economic climate. This showcases the bank’s resilience and dedication to its stakeholders.
Read More: UK Firms Boost AI Investment As Businesses Confidence Remain Strong
Businesses In England And Wales Collapsing
Furthermore, recent data has revealed a concerning trend, with more businesses in England and Wales collapsing in the second quarter of this year than in any three-month period since 2009. This highlights the challenges faced by the business community and the need for proactive measures to support economic recovery.
According to the Insolvency Service, there were 6,342 company failures in the three months leading up to June, marking a 9% increase from the previous quarter and a 13% increase from the same period last year. This means that over 13,000 companies have collapsed since the beginning of the year.
The rise in the number of firms going bankrupt has been attributed to various factors by business groups. These include high inflation, escalating rents, and the ongoing cost of living crisis, which has adversely affected customers’ spending power.