Belfast Telegraph

Hester's last day in charge at RBS

Stephen Hester was today completing his final day in charge of state-backed Royal Bank of Scotland ending a turbulent five years following the departure of his disgraced predecessor Fred Goodwin.

Mr Hester's exit was announced last June amid reports of a rift with Chancellor George Osborne. He will be replaced by New Zealander Ross McEwan, currently the bank's retail boss.

In a series of tweets today the bank paid tribute to the outgoing chief executive although there was no formal statement to add to the announcement in the summer.

One of the messages said: "RBS has been made significantly safer, with a trillion pounds taken off the balance sheet since 2008."

Mr McEwan takes the reins at a time when RBS is providing key endorsement for the Government's Help to Buy housing mortgage guarantee scheme, which is being brought forward despite concerns it may stoke a housing bubble.

Mr Hester had taken over at the bank in November 2008 in the midst of a calamitous period which saw it rescued by the Government, which still holds an 80% stake.

Its collapse followed the disastrous 2007 takeover of Dutch bank ABN Amro in a £49 billion deal that weakened its capital position and left it highly vulnerable to the looming credit crunch.

Mr Goodwin was widely blamed for the catastrophe and later stripped of his knighthood, and Mr Hester was parachuted in to put the bank back on an even keel.

Tens of thousands of job cuts followed while non-core assets worth more than £200 billion including a chain of 900 pubs and an aircraft leasing business were sold off.

RBS also began to sell off insurer Direct Line. Last week it announced a £600 million deal to hive off 314 bank branches under the revived Williams & Glyn's brand.

As Mr Hester's successor was announced in August, the bank announced it had swung back out of the red with half-year pre-tax profits of £1.4 billion.

His performance was widely admired in the City but it seemed all was not well in his relationship with Mr Osborne, amid reports the Chancellor had put pressure on him to increase the scale and pace of its investment banking restructure.

Deep public resentment over bankers' pay did not help. Mr Hester received a basic annual salary of £1.2 million.

He made clear on leaving that it was not his decision to go, telling an interviewer that he was keen to see the job through to the "champagne and roses" of a successful return of the bank to private hands - though he admitted being in the role drove him "nuts".

In a memo to 100,000 staff when his departure was announced, he stressed just how dire the group's predicament had been during the financial crisis in 2008 when he was appointed.

He said: "RBS lost sight of why it was founded, and it nearly died as a result. We've got back to a place where we can once again focus on the customer above all else."

Chairman Sir Philip Hampton said Mr Hester would be leaving RBS in a "vastly improved position that many would have thought impossible five years ago".

"In the midst of a major crisis, he accepted the challenge of stabilising the bank, turning it around, and putting us in a position where we can begin to plan for returning the organisation to the private sector. His achievements have been considerable."

The Chancellor also paid public tribute at the time, saying Mr Hester had brought RBS "back from the brink".

The bank boss is to receive 12 months' pay and benefits worth £1.6 million as well as being in line for a shares windfall of up to £4 million. He will receive no bonus for 2013.

Mr McEwan will be paid £1 million a year plus £350,000 in lieu of a pension.

At the weekend he welcomed the announcement that the Help to Buy scheme was being brought forward, as RBS announced that it would introduce a range of 95% loan-to-value mortgages under the scheme.

Opening hours at its branches, which include the NatWest network, would be extended to cope with demand, with an aim to sign up 25,500 customers.

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