LONDON: 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.
The government still owns 81 percent of RBS after it was bailed out in the wake of the 2008 financial crisis with £45.5 billion of taxpayer cash.
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.
Under Hester’s watch, RBS has axed close to 40,000 jobs and sold off non-core assets in an attempt to transform the bank’s 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 board believes that an orderly succession process will give a new CEO time to prepare the privatisation process and to lead the bank in the years that follow.
“Stephen was unable to make that open-ended commitment following five years in the job already.”
Hester said that the group was now ready for a return to the private sector and therefore needed a new boss.
“It has been nearly five years since I joined RBS after the bank was rescued by the government,” Hester 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.
“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,” he said.
British finance minister George Osborne said Hester should be commended for “having brought RBS back from the brink” after its enormous state 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.”
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 meanwhile receive 12 months’ pay and benefits worth £1.6 million ($2.5 million, 1.9 million euros) and the potential for a £4-million shares windfall from a long-term incentive scheme. However, he will not receive a bonus for 2013.