RBS boss says bank is nearing full recovery

The chief executive of RBS, Stephen Hester, has said he expects the restructuring of the bank to be complete by the end of next year.

by Michael Northcott
Last Updated: 19 Aug 2013

The Royal Bank of Scotland is a contentious issue for some, after the government stepped in to buy a majority share instead of allowing it to collapse at the height of the financial crisis. Sir Fred ‘The Shred’ Goodwin has been an object of massive public consternation ever since he left the top job at the bank. But current boss Stephen Hester today explained that the bank is on course to becoming a ‘good bank’ again, after meeting all the aims of his five-year plan, so far.

He told an audience in the City that the restructuring should be ‘largely complete’ by the end of 2013, adding that it would amount to ‘the largest corporate turnaround in history.’ He also said that the bank could soon be in a position to start paying dividends again, and that his aim is for profits to exceed its cost of capital, which after four years of taxpayer support would be a welcome change...

Still, analysts are expecting the bank to be able to support itself financially by the end of 2012. After that – and if the bank manages to stay on target – the government will be able to start selling down its shareholding soon after. Whether or not the taxpayer will get a decent deal out the sale remains to be seen. But something tells us it will end up being a net loss of a few billion, as it usually is with government-bailed companies sold back into private hands.

There has been a little frisson of bad press for RBS this week however, after it emerged that senior traders working for its investment-banking arm were engaged in open dialogue about fixing the Libor rate. Some traders were personally quoted saying things such as ‘our six-month fixing moved the entire fixing, hahahah’, according to legal documents referenced by Bloomberg. Such fixing has been controversial because it could have cost British account holders billions of pounds in lost interest on bank deposits. Not cool.

Anyway, that little stinker of a scandal is still subject to investigations by the FSA and the Serious Fraud Office, so we won’t have heard the last of it. Let’s just hope the taxpayer hasn’t lost too much once Hester’s plan finally draws to its close…

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