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Royal Bank of Scotland CEO Stephen Hester to stand down Royal Bank of Scotland CEO Stephen Hester to stand down
(about 1 hour later)
Stephen Hester is to step down from his role as chief executive of Royal Bank of Scotland in December. Stephen Hester is to step down as chief executive of Royal Bank of Scotland in December after five years in the role.
Mr Hester has been at the helm of the part-nationalised bank since 2008. The search for his successor will start immediately. RBS chairman Sir Philip Hampton said the transition was necessary if RBS was to return to private ownership by the end of 2014, as the Treasury hopes.
RBS said an "orderly succession" would allow the new CEO to oversee the re-privatisation of the bank, and lead it "in the years that follow". Mr Hester will receive 12 months' pay and benefits worth £1.6m and potential for £4m in shares.
The search for his successor at the helm of the part-privatised bank will start immediately.
In a statement RBS said an "orderly succession" would allow the new CEO to oversee the re-privatisation of the bank, and lead it "in the years that follow".
It said Mr Hester "was unable to make that open-ended commitment".It said Mr Hester "was unable to make that open-ended commitment".
RBS is hoping to start selling shares to the private sector next year. Speaking to reporters on a conference call, chairman Sir Philip said the timetable, pushed by the Treasury, for the bank's return to the private sector had forced the transition.
Mr Hester, who led the large-scale restructuring of RBS following its near collapse in 2008, will receive £1.6m in cash - equivalent to a year's salary - as part of his exit deal. He said a new chief executive would need to be in place by early next year if the bank was to begin its return to private ownership at the end of 2014.
He will keep his long-term investment plan, currently worth £3m. The Treasury has capped his maximum entitlement from this plan at £4.2m. He admitted the Treasury, which owns an 81% stake in the bank, had played a part in the decision.
"The acceleration of considering succession for a CEO role arises largely from the Treasury's determination... where it can be returned to the private sector by the end of 2014," he said.
The BBC's business editor Robert Peston said Mr Hester's departure was described by a Treasury official as by "mutual agreement".
'Bruising and difficult''Bruising and difficult'
Mr Hester led the large-scale restructuring of RBS following its near collapse in 2008 at the height of the financial crisis.
In a video statement released by RBS, Mr Hester expressed mixed feelings about his departure.In a video statement released by RBS, Mr Hester expressed mixed feelings about his departure.
"Of course I'd like to have stayed as I feel I've been in the trenches with all of my people helping RBS to recover and privatisation would have been a fitting end to those endeavours," he said."Of course I'd like to have stayed as I feel I've been in the trenches with all of my people helping RBS to recover and privatisation would have been a fitting end to those endeavours," he said.
"But it has been a very bruising and difficult job so I certainly don't have to be prised away reluctantly.""But it has been a very bruising and difficult job so I certainly don't have to be prised away reluctantly."
Later on Channel 4 News, he added: "The important thing was that we have a window of relative calm for me to step down. If I am going to step down before privatisation, it makes sense to do it now.Later on Channel 4 News, he added: "The important thing was that we have a window of relative calm for me to step down. If I am going to step down before privatisation, it makes sense to do it now.
The BBC's business editor Robert Peston said Mr Hester's departure was described by a Treasury official as by "mutual agreement".
RBS said it had made "huge progress" under Mr Hester, becoming "a strong bank, with balance sheet and funding transformed and the business fundamentally reshaped".RBS said it had made "huge progress" under Mr Hester, becoming "a strong bank, with balance sheet and funding transformed and the business fundamentally reshaped".
"[We are] now beginning to prepare for possible share sales by the UK government," it said."[We are] now beginning to prepare for possible share sales by the UK government," it said.
"Accordingly, both the board and Stephen agreed this provided a window to begin a transition of leadership."
Chancellor George Osborne praised Hester's work, saying: "Stephen Hester has made an important contribution to Britain's recovery from the financial crisis.Chancellor George Osborne praised Hester's work, saying: "Stephen Hester has made an important contribution to Britain's recovery from the financial crisis.
"Having brought RBS back from the brink, now is the time to move on from the rescue phase to focus on RBS being a UK bank that provides greater support to the British economy.""Having brought RBS back from the brink, now is the time to move on from the rescue phase to focus on RBS being a UK bank that provides greater support to the British economy."
Last month RBS said it would be ready to return to the private sector next year and expected the government to start selling shares from the middle of 2014.Last month RBS said it would be ready to return to the private sector next year and expected the government to start selling shares from the middle of 2014.
The government still owns an 81% stake in the bank after it invested tens of billions of pounds to rescue it from collapse in 2008.The government still owns an 81% stake in the bank after it invested tens of billions of pounds to rescue it from collapse in 2008.
In February, RBS announced its fifth straight annual loss since being taken over by the government.In February, RBS announced its fifth straight annual loss since being taken over by the government.