RBS faces struggle to find CEO amid political meddling
Hester’s departure engineered by chairman with backing of finance ministry
Stephen Hester who is to step down as chief executive of the Royal Bank of Scotland in December
Royal Bank of Scotland (RBS) will struggle to recruit a suitable replacement for ousted chief executive Stephen Hester (right), someone who must steer it through privatisation and accept that political interference comes with the job.
Mr Hester’s departure, engineered by chairman Philip Hampton with the backing of Britain’s finance ministry, presents RBS with the near-impossible task of finding an ideal candidate – an experienced banker untainted by the industry’s scandals who has the skill to deal with its biggest shareholder, the government.
Political and banking sources say that while Mr Hampton took the initiative in removing Mr Hester, he could not have done so without the support of finance minister George Osborne. Britain holds an 81 per cent stake in RBS after pumping £45.5 billion in to keep it afloat during in 2008.
Matthew Beesley, head of global equities at Henderson, an investor in RBS, said Mr Hester’s departure “clearly shows the hand of the government in the management of the bank”.
“It also shows very emphatically that shareholders – what few of them there are [government aside] – don’t like it. The sooner the bank is fully returned to the private sector the better,” he said, pointing to a sharp drop in RBS shares after Wednesday’s announcement that Mr Hester would go later this year.
Within the banking industry Mr Hester is respected for his success in shedding hundreds of billions worth of assets from the bloated balance sheet of what was once the largest bank in the world. However that enthusiasm is not always shared by politicians, and Mr Hester has faced calls to accelerate the bank’s restructuring.
Despite Mr Hampton’s insistence on Wednesday that RBS would be ready for privatisation by the end of next year, industry sources say the government is more likely to first sell its shares in Lloyds Banking Group, which are trading above its break-even level. – Reuters