NatWest shares plunge as bank cuts guidance and admits 'serious failings' in treatment of Brexit campaigner Nigel Farage

By Louis Goss

Farage slams report as a 'whitewash'

Shares in NatWest Group PLC (UK:NWG) fell 12% on Friday after the British bank cut its guidance and admitted "serious failings" in its treatment of Brexit campaigner Nigel Farage following the closure of his account with its private-banking subsidiary, Coutts.

NatWest's chair, Howard Davies, apologized to the former U.K. Independence Party leader following the publication of an independent report by law firm Travers Smith that identified "clear shortcomings" in the bank's handling of the Farage matter.

The report, which was commissioned by the bank, said that while the decision to close Farage's account had been lawful, NatWest failed to properly communicate the reasons for the closure, instead telling the Brexit campaigner it was done solely for commercial reasons.

The law firm's review also said the decision by former NatWest CEO Allison Rose to leak confidential information about Farage to a BBC journalist could amount to a breach of privacy rules. It noted that any verdict on this is now a matter for U.K. regulators.

Farage slammed the report as a "whitewash" as he hit out at claims in the document that the decision to close his account was not in itself a political decision. Farage noted that the word Brexit appeared 86 times in documents he obtained from NatWest via a Subject Access Request.

NatWest separately confirmed that the U.K.'s Financial Conduct Authority has now launched a review into its governance and control systems, after Britain's Information Commissioner's Office earlier this week ruled that Rose had breached Farage's privacy.

The negative impact of the report on NatWest's share price was exacerbated by the bank on Friday lowering its full-year income guidance, from GBP14.8 billion (equivalent to $18 billion) to GBP14.3 billion ($17.4 billion). The combined hits saw NatWest's share price drop to 30-month lows.

Elsewhere in Europe, shares in Sanofi SA (FR:SAN) plunged 17% after the French drugmaker cut its guidance for 2025 due to higher spending on research and development and to higher taxes.

The pharmaceutical company said it plans to spin off its consumer-healthcare unit and invest in the development of new vaccines and medicines. Sanofi also said it expects its tax rate to increase from 19% in 2023 to 21% in 2024.

Shares in cognac maker Rémy Cointreau SA (FR:RCO), which owns brands including Rémy Martin, fell 12% after the Parisian company lowered its profit guidance due to worsening market conditions in the U.S. and a slower-than-expected post-COVID recovery in China.

The STOXX Europe 600 index (FXXP00) stayed flat on Friday following the European Central Bank's decision on Thursday to leave interest rates unchanged, following a series of 10 consecutive rate hikes. ECB President Christine Lagarde, however, did not rule out the possibility of future hikes.

-Louis Goss

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10-27-23 0955ET

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