NatWest had “resolved all its major legacy issues”, declared Sir Howard Davies, the chairman, 18 months ago, speaking far too soon. Here comes another potential nasty one. The Financial Conduct Authority is bringing criminal charges under the 2007 money laundering act, alleging the bank’s systems and controls “failed to adequately monitor and scrutinise” the deposit of £264m in cash in one corporate customer’s account between 2011 and 2016.
The City, in its normal breezy way, took the relaxed view that even if convicted, any hit to NatWest would be bearable. The bank’s shares fell only 1.5%. Maybe investors were thinking of the £163m penalty on Deutsche Bank in 2017, or the £102m on Standard Chartered in 2019, in civil cases brought by the FCA.
The point about a criminal case, however, is that it is different – or meant to be. If there is a conviction, the fine can be unlimited and, as importantly, the reputational impact on the bank is meant to sting. The latter factor is why HSBC was so anxious to secure a deferred prosecution agreement from the US Department of Justice in 2012, even as it agreed a thumping penalty of $1.9bn for money-laundering and sanctions-busting offences.
NatWest doesn’t have the same international presence as HSBC, and the Treasury’s 62% stake may serve as a useful real-world deterrent against a truly serious outcome. But the FCA clearly believes it is in the public interest to bring criminal charges for the first time under the 2007 legislation, which makes the consequences of a guilty verdict impossible to predict.
If the Treasury was thinking of selling a few more shares in NatWest, it should probably shelve the idea for the time being. The bank is back in the familiar world of limbo land.
Give ordinary shareholders a hi-tech voice
Here’s a challenge for those financial technology, or fintech, companies that keep promising to rewire the financial system: design some wizardry to enable ordinary savers to express a view on how the shares in their pension pots should be voted at companies’ annual meetings.
The idea comes from Charlotte Black, a non-executive director at investment trust Aberdeen Standard Asia Focus, and can be found in a collection of essays on “responsible capitalism” published by the Social Market Foundation thinktank on Tuesday.
Votes that actually count at annual meetings might be impossible, concedes Black, since custodial arrangements are cheap and efficient. But how about smartphone tech that would allow the saver to say whether she or he backs a resolution on, say, boardroom pay or climate? The fund management house would get a tally of views ahead of the company’s meeting. If it opts to vote against the majority, it would have to explain why.
The idea isn’t perfect but it might help to shorten “the long complex supply chain between savers and their underlying shareholdings”, as Black puts it. That would be a useful service. If you really want to rein in boardroom pay, for example, ask the ultimate owners of the assets, as opposed to the people managing the assets, what they think.
AstraZeneca deserves a fair profit from the pandemic
Virtue has its reward, after all. AstraZeneca’s vaccine is still getting bashed in various EU capitals (although not, note, by the European Medicines Agency) but the US seems keen on the company’s separate Covid-19 antibody treatment. US authorities have submitted an order for extra doses, taking the value of agreements to $726m.
The antibody treatment is designed for people who can’t take the vaccine or already have the Covid virus. The other difference is that AstraZeneca is allowed to make a profit from the antibody product. Given the political hassles the company has encountered with a vaccine that it is supplying at cost during the pandemic, that only seems fair.