Speaking this morning on the Today programme, the RBS chief executive added that he’d nearly resigned over the drama but that it would have been an ‘indulgent’ move. His decision instead to forego his £963,000 bonus served to both placate the masses and burst the media balloon.
Over the past 24 hours, the public has seen a more personal side to the RBS chief, starting yesterday, when he circulated a letter amongst his staff. The note addressed the negative media attention surrounding the bank in the past fortnight: ‘I am acutely conscious that the way our company has been in the media and political spotlight this last 10 days is discomforting to say the least,’ he wrote. ‘Many have felt a broader impact on RBS of the uncertainty and criticism.’
The letter both recognised the difficulties faced by bank staff and tried to deliver a kind of pep talk: ‘RBS is full of good people, doing their best across a multiple set of challenges,’ Hester wrote. ‘We have good and enduring businesses.’
But his interview with Jim Naughtie this morning made it clear that he’s in need of a bit of a boost himself. ‘I am not a robot’ he said.
Hester has had an interesting three years at RBS. Drafted in to replace Fred ‘The Shred’ Goodwin, he has had to make tough choices again and again. ‘I had to replace the whole senior management team at RBS,’ he recalls. ‘Not just people to run the bank well, but to defuse the biggest time bomb in history in terms of bank balance sheets.’
He has probably been doing as good a job as could be done - in the circumstances. As outlined in his memo: ‘Over the last three years we have generated over £33 billion of pre-impairment profits in the face of many challenges. This has allowed us to afford to take the costs of "clean up" from our risky inheritance, in loan losses, disposal costs and restructuring charges. We are ahead of schedule in that clean-up; we have been able to spend money and accelerate it as the outside environment got worse. RBS is a much safer company as a result.’
Despite his confidence in his performance, accepting the bonus would have been ‘damaging’ to RBS’ reputation, Hester admitted, adding: ‘I want RBS to recover well and ideally for me to be remembered as someone who contributed to that process.’
In fact, rather than bemoan his lot, Hester expressed his sympathy for public opinion on bankers’ pay, even acknowledging that the banking sector had succumbed to hubris after years of expansion. ‘I think there was both overconfidence and, with the benefit of hindsight, over-rewards,’ he said.
So, round two in the bonus wars goes to Hester, on points. But the only way to get a knockout is to get RBS' share price back up and sell it. That's going to take quite a while...