DOES NatWest Group, the state-backed owner of Royal Bank of Scotland, have an incurable addiction to shooting itself in the foot?

It is becoming hard to avoid that impression, following the latest public relations bungle by a senior figure at the bank.

One might have assumed that top brass at the lender, which remains 37.97% owned by taxpayers, a legacy of its £45.5 billion bail-out during the financial crisis of 2008/2009, would have been looking to keep a low profile following the Nigel Farage scandal of last year.

To recap, the former chief executive of NatWest, Dame Alison Rose, was forced to resign after admitting to being the source of stories in the BBC about the status of accounts held by the former UKIP leader with Coutts, NatWest’s private bank. The episode cast a shadow over NatWest for the second half of 2023 and raised fresh questions over governance at the bank, which had been striving to repair its corporate image after years of damaging headlines concerning the behaviour of certain managers in the wake of its bail-out.

Chairman Sir Howard Davies was criticised for his initial defence of Dame Alison over her role in the Farage affair, and some felt he too should have resigned over the matter. He will now stay on until his planned retirement from the role in April.

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But rather than keeping his head under the parapet until his departure, Sir Howard walked into a new row recently, following ill-judged remarks over the ability of people to buy a home in the current market conditions. Despite the recent surge in interest rates, which has made mortgage borrowing a whole lot more expensive, Sir Howard caused outrage in a BBC interview when he said that it was not currently “that difficult” to buy a home.

Asked on the BBC Radio 4 Today programme when it was going to be easier for people to get onto the property ladder in this country, Sir Howard told presenter Amol Rajan: “Well, I don’t think it is that difficult at the moment but… You have to save. And that’s the way it always used to be.”

Pressed on his response by the presenter, who highlighted the difficulties faced by people under 40 in trying to buy a house in a major UK city, the NatWest chief went on: “Yes, undoubtedly. But what we saw in the financial crisis was the risk of having people being able to borrow 100% in order to get onto the property ladder, and then suffering severe falls in the equity value of their houses, and having to leave and having a bad credit record etc.

“So there were dangers in very, very easy access to mortgage credit so I totally recognise that there are people who are finding it very difficult to start the process. They will have to save more. But that is, I think, inherent in the change in the financial system as a result of the mistakes that were made in the last global financial crisis, and we have to accept we are still living with that.”

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Unsurprisingly, given the recent surge in interest rates and the upward pressure this has put on the cost of mortgages over recent months - which has come amid an ongoing cost of living crisis - Sir Howard’s remark that it was not currently “that difficult” to buy a house saw him come in for heavy criticism.

Ben Twomey, chief executive of campaign group Generation Rent, said the remarks were “astounding to hear from a senior banker”, and even Chancellor of the Exchequer Jeremy Hunt waded in, telling ITV’s The Martin Lewis Money Show: “I just don’t really understand how he could have said that.

“When I am looking at the pain that families are going through because they've seen interest rates go up to five and a quarter per cent, mortgage rates go up by considerably more than that if they have to change it.

"So, I think people are finding it very difficult and we are seeing that in the volume of house transactions that are happening."

To be fair to Sir Howard, he attempted in a later interview that day to clarify his remarks, insisting that he “did not intend to underplay the serious challenges” people face in buying a home. He acknowledged the particular pressure facing first-time buyers.

Sir Howard was also obviously correct in highlighting the changes to the financial system which came about after the financial crisis, which had been predated by much looser lending policies at the major banks.

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But he will perhaps regret his choice of language concerning general mortgage availability and affordability in the here and now.

The rise in the cost of borrowing has been a source of acute financial discomfort for many households and for many prospective homebuyers, particularly those looking to make their first purchase, the possibility of being able to acquire their first home may have become a remote prospect, as a result of the base rate having increased to its current 5.25% from a record low of 0.1% in December 2021.

From the perspective of NatWest itself, it was another unwelcome bout of bad publicity that it could really have done without, coming so soon after the Farage debacle.

Sir Howard, who has held a variety of high-profile roles in a distinguished career in financial services, can point to significant achievements during his tenure at NatWest. The bank has returned to profit, bolstered its balance sheet, delivered big returns to shareholders, and seen the UK Government’s stake in the bank reduced while he has served as chairman.

But it has not all been plain sailing, as the controversies around Dame Alison and now his remarks on the housing market have shown.

With new chairman Richard Haythornthwaite arriving in April, and what seems to be expectation in some quarters that interim chief executive Paul Thwaite will be given the chance to succeed Dame Alison on a permanent basis, there is an opportunity for NatWest to start afresh on the public relations front.

Given the UK Government has signalled its intention to launch a retail sale of the public’s shares in the bank at some stage this year, the need for NatWest to get it right on the messaging front could scarcely be more important.