LONDON’S BUSINESS NEWSPAPER
GRAB THE POPCORN OUR PICK OF THE LATEST FLICKS TO HIT THE BIG SCREEN P20 THURSDAY 27 JULY 2023
ISSUE 4,020
MARK KLEINMAN THE INSIDE TRACK ON THIS WEEK’S TOP STORIES P14
CITYAM.COM
FREE STATESIDE CALL
Fed sends US rates to 22-year high JACK BARNETT
BEWARE OF FALLOUT NATWEST BOARD IN DANGER ZONE AFTER HANDLING OF CEO OUSTER
CHRIS DORRELL NATWEST’s board was under fire last night after its disastrous handling of CEO Alison Rose’s exit, agreed at a hastily arranged board meeting in the early hours of yesterday morning. In a dramatic volte-face, Natwest announced yesterday that Rose would resign just hours after the board had expressed its confidence in her leadership on Tuesday evening. The move came after Rose revealed she had been responsible for unwittingly serving as the source of a BBC story about Nigel Farage’s Coutts bank account, which was shut for political reasons. The CEO insisted she had not
discussed Farage’s personal financial circumstances specifically, but it is understood that individuals within both 10 Downing Street and the Treasury expressed dismay at the original decision to keep Rose. Calls were growing yesterday for Sir Howard Davies, the lender’s chairman, to step down ahead of his scheduled departure in spring of next year. Farage told GB News that Rose’s exit was “a start” but the “whole board needs to go”. He argued Coutts boss Peter Flavel must take “ultimate
responsibility” while chair Davies is “responsible for overall governance”. Investors also raised question marks over Davies’ judgement. One top-20 investor told the Financial Times “he’s clearly not in charge” while another said “my suspicion is that he will end up going, but probably shouldn't have to”. However, City minister Andrew Griffith said there was no need for Davies, who is stepping down next year, to resign. “There’s already a search under way... for
his replacement,” he said. Griffith separately chaired a meeting of bank bosses who committed to avoid making similar calls to Coutts in future. Shares in the lender dragged on the FTSE 100, ending 3.7 per cent lower. With Rose’s exit, the FTSE 100 lost one of its few female chief executives and some highlighted the possible sexism around the saga. City grandee Ann Francke, who held senior positions at both Proctor & Gamble and Boots and now runs the Chartered Management Institute, suggested women in senior positions might be held to a “higher standard than their male counterparts – most notably when they make a high-profile mistake”.
THE US Federal Reserve last night launched what many on Wall Street think will be the final interest rate hike in its current tightening cycle. Members of the Federal Open Market Committee (FOMC) backed a 25 basis point increase to leave the federal funds rate at a range of 5.25 per cent and 5.5 per cent. It means the world’s most important interest rate now stands at its steepest level in 22 years. The vote was unanimously in favour of the rise. Wall Street’s S&P 500 was broadly unchanged on the news, down 0.16 per cent. Treasury yields barely budged. The dollar was flat. It also marks a return to tightening after the Fed paused raising borrowing costs at its last meeting in June. Fed chair Jerome Powell (pictured) and co wanted to wait for the effects of its previous rises to filter through the economy to judge whether more increases were necessary. US inflation has fallen sharply from its peak of just over nine per cent this time last year to three per cent, close to the Fed’s two per cent target. That has dialled back pressure on the central bank to douse the US economy with aggressive rate rises and opened the door to the Fed to stop bumping up rates. At last month’s meeting, Powell said the FOMC was minded to tread carefully to avoid piling unnecessary pain on households and businesses. US rate cuts aren’t expected until at least early next year.
INSIDE FTSE FIRMS TOLD TO CUT THE JARGON P5 OFGEM TOUGHENS UP ON SUPPLIERS P6 ROLLS-ROYCE BOOSTED BY AVIATION P7 MARKETS P17 OPINION P18-19 SPORT P26-28