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Boss of bailed-out Royal Bank of Scotland to step down

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(Globalpost/GlobalPost)

Britain's state-rescued Royal Bank of Scotland said Wednesday that chief executive Stephen Hester has decided to step down after five years at the helm, during which he has overseen a vast restructuring in readiness for the group's eventual privatisation.

Hester admitted that the task of putting RBS on an even footing while meeting the demands of the government -- which still owns 81 percent of the bank after it was bailed out in the wake of the 2008 financial crisis -- had been at times "bruising".

The Edinburgh-based lender was ravaged by its badly timed consortium takeover of Dutch bank ABN Amro at the top of the market in 2007, just before the crisis struck, and was kept afloat with £45.5 billion ($71.3 billion, 53.5 billion euros) of taxpayer cash.

Under Hester's watch, RBS has axed close to 40,000 jobs and sold off non-core assets in an attempt to transform its fortunes.

"The board of directors of The Royal Bank of Scotland Group plc (RBS) today announced that Stephen Hester will be stepping down as the group's chief executive later this year," RBS said in a statement.

The bank explained that the decision had been taken in order to give a new CEO time to prepare the privatisation process.

"Stephen was unable to make that open-ended commitment following five years in the job already," added the statement.

But Hester later expressed "some human regrets" that he would not get the chance to oversee the transition himself.

"I have been pretty clear that I suppose I feel torn about this -- I feel a sense of loyalty to the company and I want to do what is right for the company," he told reporters.

"If that was to lead the company through privatisation, I wanted to do that."

He insisted that he had left the bank in a healthy state for a return to the private sector.

"It has been nearly five years since I joined RBS after the bank was rescued by the government," he said.

"In that time we have reduced the bank's balance sheet by nearly a trillion pounds, repaid hundreds of billions of taxpayer support, and removed the imminent threat that this bank's size and complexity posed to the UK economy."

Hester will continue to lead the business until December 2013 to ensure a smooth handover.

He said he was "cooperating amicably" with the bank and "will stick around as long as they need me".

RBS chairman Philip Hampton told Sky News that the bank "will now start the formal search" and also failed to rule out reports that it was about to reveal the loss of another 2,000 jobs, saying there was to be an "announcement about our investment banking activities."

British bookmakers expect the appointment to come from within, with Nathan Bostock, the bank's head of restructuring and risk, leading the running.

Hester's unusual role of leading a bank mostly owned by the state occasionally saw him come into conflict with the government, particularly over bankers' pay.

Political uproar forced him to waive a bonus worth almost £1 million in January 2012, and he then voluntarily gave up another after IT problems plagued subsidiary Natwest.

But British finance minister George Osborne said Hester should be commended for "having brought RBS back from the brink" after its enormous bailout.

"When Stephen Hester took on the job at RBS in 2008 it was a bust bank with a broken culture and posed a huge risk to financial stability," Osborne said.

"RBS today is safer, stronger and better able to support its customers. I want to commend Stephen Hester for everything he has done to make this turnaround possible."

Business Secretary Vince Cable said Hester had "performed a necessary role at a difficult time."

Meanwhile, an influential committee of British lawmakers was reportedly set to call for RBS to be split into a good bank and a bad bank, where the lender's toxic assets could be unwound without endangering profitable business.

The Parliamentary Commission on Banking Standards is due to call for the break-up of the lender, according to media reports.

Hester will receive 12 months' pay and benefits worth £1.6 million and the potential for a £4-million shares windfall from a long-term incentive scheme. However, he will not receive a bonus for 2013.

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http://www.globalpost.com/dispatch/news/afp/130612/boss-bailed-out-royal-bank-scotland-step-down