NatWest (LSE: NWG) shares have been sliding this year and now look like a pretty cheap buy, especially after the recent scandal involving the account of one Nigel Farage.
The share price was £3.09 back in February before the US-led banking crisis brought shares down to £2.47 up to last week.But today I could buy in for only £2.39. I must say that looks attractive.
The valuation looks underpriced as well. NatWest now trades at around six times earnings, a bargain compared to the FTSE 100 average of 14. Although, I will say it’s in line with other UK banks like Lloyds (6.5) and HSBC (6.8).
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The yield has been bumped up too. With the lower price, I would now be looking at a 6.52% dividend yield, one of the highest returns on the Footsie.
But while I have little doubt that NatWest shares look cheap, whether I’ll buy in here is another question. To answer that, I’ll have to circle back around to that Farage story.
To recap, high-net-worth bank Coutts – part of NatWest Group – suspended the account of Nigel Farage. This made headlines when the former politician posted on social media about it. He said that he was given no reason for the action.
What happened
Shortly after, the BBC posted a ‘verified’ story stating that the reason was that he didn’t have enough money for the account. He didn’t meet the minimum requirements and therefore was no longer eligible.
It turned out the source for that story was the CEO of NatWest, Dame Alison Rose, who not only revealed confidential customer information but lied while she was doing it too.
So basically, we’ve got a CEO who broke the number one rule of banking: don’t reveal client details. Not only that, but she planted a story in the press to make one of her customers look bad. That’s awful, if you ask me.
It gets worse though. Farage was able to get his hands on a 40-page file the bank had on him. This file criticised his “xenophobic, chauvinistic and racist views” that were “at odds” with the bank’s ethos.
So, the bank tried to cancel someone’s account because of their political beliefs. This doesn’t sit well with me and makes me wonder what the priority is for the company. I mean, why were resources even spent on this task in the first place?
A buy?
When all this came out, Rose resigned, but not before the boardroom unanimously voted that it still had confidence in her. That’s in spite of the issues above, including the suspending of an account based on political grounds. All that, and they stood by her to a man.
This suggests to me the higher-ups at NatWest are more interested in political point-scoring than running a business. Do I want to buy shares in a company with this kind of management? The answer is no.
