NatWest chair Howard Davies says Alison Rose was a ‘great leader’ amid Farage row; company insolvencies jump – business live

The row over access to UK bank accounts is creating some unlikely alliances.

Nigel Farage has thrown his backing behind anti-Brexit campaigner Gina Miller, after it emerged this morning that Monzo bank is to close the bank account of Miller’s True and Fair party.

Farage says he stands with Miller, who famously challenged the UK government in 2016 over its authority to trigger the process of leaving the European Union without parliamentary approval.

Miller warned this morning that “we don’t have a functioning democracy” if new political parties cannot access banking services.

America is continuing to win its battle against inflationary pressures.

The US PCE price index, which tracks cost changes, rose by 3% in the year to June, data just released shows, down from 3.8% in May.

That matches the official reading for consumer price inflation in June, which dropped to 3% this month too – nearer to the 2% target.

Prices for goods decreased by 0.6% while prices for services increased 4.9%.

Food prices increased 4.6% while energy prices tumbled 18.9% compared to a year earlier.

Core PCE, which excludes food and energy, rose by 4.1% from one year ago. This measure is closely watched by the Federal Reserve.

Newsflash: Dr Ben Bernanke, the former head of America’s central bank, the Federal Reserve, is to lead a review into the Bank of England’s forecasting.

The BoE says the review will aim to “develop and strengthen” the Bank’s support for the Monetary Policy Committee’s approach to forecasting and monetary policy making in times of uncertainty.

This follows criticism that the Bank failed to predict the surge in inflation over the last year or two, meaning it was too slow to tighten monetary policy by raising interest rates.

Bernanke, who ran the Fed from 2006 to 2014 and won the 2022 Nobel prize in economics, says:

“Forecasts are an important tool for central banks to assess the economic outlook.

But it is right to review the design and use of forecasts and their role in policymaking, in light of major economic shocks. So I am delighted to be leading this work for the Bank.”

A month ago, the Bank’s chief economist, Huw Pill, said the Bank’s forecasting models became become “unworkable” in the current crisis, as they failed to fully appreciate the the interaction of high energy prices and a tight jobs market.

Here’s our news story about Howard Davies’ plan to remain NatWest chair to provide the bank with stability, and the bank’s hiring of external lawyers to investigate the closure of Nigel Farage’s Coutts accounts.

It explains:

Davies, who was already due to retire from his post in summer 2024, told journalists on Friday morning that the search for his successor would continue in a “completely normal” manner, despite the prime minister failing to publicly back him a day earlier.

“My intention is to continue to lead the board,” Davies said.

“My understanding is that we do have the support of our main shareholder and of the regulators, for us to continue to steer this bank forward,” he said, referring to the government’s 38.5% stake, a hangover from its 2008 state bailout.

More here.

Pharmaceuticals group AstraZeneca has, like NatWest, beaten profit expectations this morning, despite a tailing off in revenues from Covid-19.

AstraZeneca reported a 25% rise in core earnings per share for the second quarter of the year. Revenues rose 4% to $22.3bn, despite a decline of $2.2bn from Covid-19 medicines.

AstraZeneca reported no sales of Vaxzevria, its Covid-19 vaccine, in the second quarter.

Instead, its blockbuster cancer drugs lifted sales, with oncology revenues up 22% thanks to a “strong performance across key medicines and regions”.

AstraZeneca chief executive Pascal Soriot told reporters this morning that the company was “very encouraged” by interim data from the trial of a key lung cancer drug, called datopotamab deruxtecan.

At the start of July, AstraZeneca’s shares fell 8% after the firm said it was too soon to say with statistical significance if patients taking datopotamab deruxtecan would also live longer. Investors were disappointed then that the company did not say the data was “clinically meaningful”.

Today, AstraZeneca’s shares are up 4%.

England and Wales report highest number of company insolvencies since 2009

Phillip Inman

More businesses in England and Wales collapsed in the second quarter of the year than in any three month period since 2009, according to the latest figures from the Insolvency Service.

The government agency said the number of company insolvencies in the three months to the end of June was 9% higher than the previous quarter and 13% higher than the same period last year.

Company insolvencies reached 6,342 in the quarter, comprising 5,240 creditors’ voluntary liquidations (CVLs), 637 compulsory liquidations, 409 administrations and 56 company voluntary arrangements (CVAs).

In total, in the first half of 2023, there were almost 13,000 corporate failures, the agency said.

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 wholesale and retail trade and hotels and restaurants. Manufacturing made up 8% of cases.

Sam Fenwick, a partner at the law firm Wedlake Bell said:

“More and more businesses are struggling to make ends meet due to increased overheads and their customers having less money to spend.

He added:

“Directors are increasingly throwing in the towel, particularly in smaller businesses.”

Politicians on the right of the political spectrum aren’t the only ones to fall victim to ‘debanking’, it seems.

According to the BBC, anti-Brexit campaigner Gina Miller was told a bank account for her political party would close without explanation.

The BBC reports:

Monzo initially refused to tell Ms Miller why her “True and Fair” party account would be closed in September.

After the BBC contacted the bank about the case, it said it did not allow political party accounts and had made a mistake in allowing it to be opened.

Monzo said it recognised the experience would have been “frustrating for the customer and we’re sorry for that”.

More here.

It’s not exactly the same as Nigel Farage’s situation, as the ex-Ukip leader saw his personal account closed. But it will put more focus on the issue.

Away from NatWest, the high court has dismissed a legal challenge by five Conservative-led councils against the expansion of London’s ultra-low emission zone (Ulez).

Our transport correspondent Gwyn Topham explains:

The zone, which the mayor of London, Sadiq Khan, has said is a vital move to tackle toxic air, is due to be extended throughout the whole of Greater London at the end of August, making owners of the most polluting cars pay to drive.

The outer London boroughs of Bexley, Bromley, Harrow and Hillingdon, along with Surrey county council, launched legal action in February. At the high court earlier this month, barristers argued that Khan had failed to adequately consult, overstepped his powers, and had provided a flawed £110m scrappage scheme.

Our Politics Live blog has all the reaction to th decision:

Full story: NatWest to pay UK government £190m as Farage crisis rocks bank

Kalyeena Makortoff

NatWest will make a fresh £190m payout to its largest shareholder, the UK government, after Downing Street had an influence in the resignation of Alison Rose as the bank’s chief executive 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, meaning it will not affect the taxpayer’s stake.

It comes during a chaotic week for NatWest Group after the departure of Rose and the ousting of the boss of its private bank Coutts, which triggered a scandal after closing Farage’s bank accounts earlier this year.

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.

More here.

Law firm Travers Smith to probe NatWest’s handling of Farage affair

Anna Isaac

NatWest has appointed law firm Travers Smith to independently probe its handling of the Farage affair, our City editor Anna Isaac explains.

This review will have three aims: to check how Farage’s accounts at private bank Coutts were closed; why they were shut down; and how such a controversial set of statements about his political views and actions were compiled.

It will also look at how the bank communicated with him about his accounts at the bank and their closure.

The investigation is also set to examine the “timing and content” of updates about Farage’s accounts from Coutts to Natwest group level – suggesting this could include memos or briefings from former chief executive Peter Flavel to ex-group boss Dame Alison Rose.

One of its more sensitive tasks will be to put a spotlight on the circumstances and nature of any leaks to the press, and what confidential information may have been passed from the banking group to the media, including the BBC.

Beyond the handling of Farage’s accounts, the probe will also look at all accounts closed at Coutts over the past 24 months. It will follow a similar approach as with the Farage-specific investigation: looking at questions of how and why accounts were shut, and what was said to all other customers whose accounts were shut down.

Howard Davies ended his call with journalists about this morning’s results by insisting that this morning’s results are “positive” (Natwest posted a rise in profits to £3.6bn for the first half of the year).

People will want to look at its ‘net interest margin’, after NatWest cut its guidance on this profitability measure this morning (see earlier post), Davies predicts.

But, he says, “the bank is in a good financial condition”, insisting:

We have not seen deposit outflows or customer outflows on any scale which concerns us.

And the NatWest chair insists that business continues as normal.

Davies signs off by saying that Natwest is open for business for its customers, explaining:

I want to end where I began by reassuring our customers, and our shareholders, that the business of this bank is continuing as normal and will do because it’s crucial from the British economy point of view and for the 19 million customers we serve, that they know that, in spite of all this, we are open for business and ready to serve them.