Presumably RBS’ board had been hoping for a nice, easy few days after Stephen Hester’s resignation. Announce after the market closes on a Wednesday afternoon, do a round of interviews on Thursday morning, sit back and wait for the markets to be reassured that George Osborne is doing everything he can to privatise the bank asap.
In the event, that didn’t happen. First, there was ex-City minister Lord Myners’ interview on last night’s Newsnight, during which he alleged that far from being amicable, Hester’s departure had come at the behest of the chancellor.
‘[Hester] made it very clear he didn’t really want to go now. He’s going because the board has said he should go and I think they are doing the bidding of George Osborne,’ he said.
Then there was the announcement, timed so close to Hester’s resignation that the conspiracy-prone among us might think it was supposed to be buried, that RBS is due to cut another 2,000 jobs in its investment banking arm.
Next, there was the tumble in share prices (over 6% at the time of writing) that suggest the markets are none too impressed with what the board/chancellor is trying to do.
Finally, chairman Sir Phillip Hampton hinted in an interview with Bloomberg TV that he was planning to quit, saying ‘when we have a new CEO, other aspects of board succession will be addressed’, adding that chairman ‘usually’ serve for between five and seven years. He’s been in his role for five years.
What a mess.
In a statement to the stock exchange yesterday afternoon, the bank said Hester’s departure was amicable, saying he was ‘unable to make the open-ended commitment’ needed to steer the bank into privatisation.
Hester said: ‘It has been nearly five years since I joined RBS after the bank was rescued by the government.
‘We are now in a position where the government can begin to prepare for privatising RBS. While leading that process would be the end of an incredible chapter for me, ideally for the company it should be led by someone at the beginning of their journey.’
But the curious thing is that when Hester was brought in in 2008, it was to turn the bank around and oversee its privatisation. Most struggling businesses would be delighted to have him on board, as indicated by this tweet from Channel 4’s business editor.
Curiouser and curiouser: a fellow Big Bank Boss told me the one job you'd definitely want Hester to lead, is an IPO. His speciality.— Faisal Islam (@faisalislam) June 13, 2013
This suggests that George Osborne’s hurry schedule to privatise the bank – there are even rumours that he’d like to begin proceedings by the end of this year – are at odds with Hester’s views. Although the RBS chief exec told this morning’s Today programme that he hadn’t spoken to the chancellor for ‘two or three months’, so the two have hardly been embroiled in a frank exchange of views…
Still: his payoff should go some way to easing the pain of loss: Hester will walk away with £1.6m 'representing 12 months' pay and benefits', as well as two million share options worth roughly £3m. We're told he 'will not receive a bonus for 2013', though. That's ok, then.
He added that he wouldn’t step down until December, by which time the company will hopefully have found a replacement for him. The search will be led by Hampton, who says he will consider ‘both internal and external candidates’.
MT can’t help but think Hester's – and Hampton’s (if it happens) – departure will make it harder, rather than easier, to privatise the bank. But who are we to judge?