RBS shares plummet after CEO quits
Stephen Hester said yesterday he would step down after almost five years in the post
Royal Bank of Scotland stock fell as much as 8.2 per cent after chief executive officer Stephen Hester quit and the company started to cut 2,000 investment-banking jobs.
RBS will exit its equity derivatives and structured retail products divisions, Edinburgh-based RBS said in a memo to employees today.
Mr Hester (52) said yesterday he would step down after almost five years in the post, without naming a successor.
His exit may delay the government’s plans to reduce its 81 per cent stake in RBS to late 2014, according to Bank of America analyst Michael Helsby.
It may be hard to find a replacement given the political interference in how the bank is run, said Crispin Odey, whose London-based Odey Asset Management oversees $9.5 billion.
A panel of British lawmakers is this week considering whether to push for a break-up of the lender, which received the biggest banking bailout in the world during the financial crisis.
“The real problem for the government is that they’ve made the job look so unattractive that I can’t imagine who they are going to fill it with,” said Mr Odey, who said he sold his RBS shares because of government meddling in the bank.
The shares were down 5.7 per cent to 307.2 pence by 9.57am in London trading, below the 407 pence a share the government sees as the break-even price on its investment.
RBS had announced about 3,800 job-cuts the previous year as well as plans to sell or close the unprofitable cash equities, mergers advisory and equity-capital markets divisions.
“It needs to downsize,” deputy prime minister Nick Clegg said of RBS on LBC Radio today.
“It can’t carry on being this huge, big hulking, what they call ‘universal bank.’ It’s got to shrink down to a size where it has got a sustainable, stand- alone future.”
RBS sped up its succession plans because of the Treasury’s desire to start reducing its stake in the lender, chairman Philip Hampton said.
Mr Hester said yesterday he was leaving by the end of the year at the board’s request to enable a successor to be in place when the government starts selling.