By a Newsnet reporter
RBS chief executive Stephen Hester has resigned from the troubled bank with a resignation pay-off worth £1.6 million in cash and benefits and £4 million in shares, as the bank prepares to announce a further round of redundancies.
Mr Hester’s resignation comes just a week before Chancellor George Osborne is expected to announce a plan to the return of the bank, which is 81% owned by the taxpayer, to the private sector.
It is understood that Mr Hester was asked to step down by the bank’s board following consultations with the Treasury. He is expected to leave the post towards the end of this year, leaving his successor to oversee the task of the privatisation of the bank.
Although Mr Hester had indicated that he would like to stay on and remain in charge of the bank during its privatisation, it has been widely rumoured that the Treasury was keen to replace him.
In a statement, Mr Hester said:
“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. I will therefore step down at the end of this year to allow a new CEO to lead the group in this next stage.”
However the details and timing of the sell off have still to be agreed at Cabinet level. Mr Osborne is thought to be keen to press ahead with the privatisation as soon as possible, as part of a possible pre-election give-away to boost the Conservatives, but according to reports the Liberal Democrats have been blocking an early sale, citing concerns that the sell off must not entail losses to taxpayers.
Praising Mr Hester’s “important contribution” to the bank’s recovery, Mr Osborne said:
“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, helping businesses and job creation here, and which can return to the private sector in a way that ensures value for the taxpayer.
“The next three weeks will mark the next phase in our plan to heal the British economy. In a week’s time, my Mansion House speech will have more to say on the reform of the banking system.”
Mr Hester’s resignation and massive pay-off comes as the bank prepares to announce further job cuts and branch closures in preparation for the sell off. The next round of cuts will come on top of previous job losses at the bank, which total 38.500 since the bank’s near collapse in 2008.
This week RBS attracted criticism after it came to light that £215million of the bank’s £607million bonus pool would go to investment bankers in its so-called “casino banking” division, the sector which is regarded as having brought the bank to its knees in the first place.
Speaking about the planned new job cuts and the decision to reward senior executives who share responsibility for the bank’s failure, Dominic Hook of the union Unite said:
“This is brutal and irresponsible behaviour from RBS which is almost entirely owned by the taxpayer. It is high time that the banks took social responsibilities seriously. The industry almost caused the economy to implode in 2008 and now it is contributing to a jobs crisis.”