McEwan confirmed as RBS chief executive

Ross McEwan will, as predicted, take over from Stephen Hester when he steps down in October.

by Emma Haslett
Last Updated: 25 Nov 2013

It's the most badly-kept secret in business, but RBS nonetheless felt it necessary to keep the world waiting until this morning to confirm Ross McEwan, its head of retail banking, will replace Stephen Hester as chief executive.

The Kiwi, whose salary will be £1m a year, has only been at the bank for a year, but emerged as the frontrunner for the job last week when external candidates - including BlackRock head of Asia Pacific operations, Mark McCombe - melted away, presumably spooked by the government's involvement in Stephen Hester's departure.

McEwan's appointment led shares to drop by almost 4% this morning, on worries that he lacks experience in investment banking. But it marks a shift of focus for RBS, which has increasingly concentrated on its retail banking arm. RBS isn't the only one: Barclays appointed Antony Jenkins, its former head of retail banking, last year.

But for many, McEwan is the right choice: Brian Hartzer, the previous head of retail banking at RBS, said in this morning's FT that he is the 'ideal leader to help rebuild comfience in the brand'.

'Ross is clearly one of the standout retail bankers globally,' added Hartzer.

More importantly, during McEwan's tenure as head of retail at Commonwealth Bank of Australia, profits rose by 50% to A$2.8bn.

The announcement came as the bank announced its results for the first half of the year, showing pre-tax profits in the six months to the end of June had risen to £1.4bn, compared with a loss of £1.7m during the same period last year. Revenues, though, dropped slightly, from £11.7bn last year to £10.6bn this year.

RBS said it expects its Basel III Core Tier 1 ratio to top 9% by the end of the year, while its leverage ratio is a comfortable 3.4%.

After yesterday's suggestion from 39% taxpayer-owned Lloyds that now might be the time to start considering a privatisation, Hester suggested the same.

In a statement that felt more emotional than your average, Hester said 'RBS' journey from 'bust bank' to 'normal bank' is largely done'.

'But no small task remains - to harness the energies and strengths that have driven the bank's recovery, and to take RBS towards the target of being a 'really good bank' for customers, shareholders and society as a whole.'

Can McEwan do what Hester couldn't, and help to take RBS private while negotiating political interference? Keeping ministers happy will be one of his biggest challenges. Although McEwan has been quoted in the past saying he is 'more comfortable with people than figures' - so perhaps he is the man for the job.

- Read 'five things you didn't know about Ross McEwan'

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