Royal Bank of Scotland Group PLC (RBS) "nearly died" after
losing sight of its principles in the lead-up to the financial
crisis, but the hard work of staff means it overcame the odds to
recover, outgoing Chief Executive Stephen Hester told staff in a
memo late Wednesday announcing his departure.
Mr. Hester resigned Wednesday, saying he would have liked to
stay longer but that the board decided he should go and bring in a
new CEO to oversee the bank's eventual privatization. RBS is
81%-owned by the government after a 46 billion pound ($72.03
billion) bailout in 2008 and 2009. Mr. Hester was brought in as CEO
in November 2008 and put in place a five-year recovery plan that is
near completion. The government is expected to start selling down
its stake some time after 2014.
"Nothing about this decision was easy, but I can see that as we
head towards a potential privatization, now provides a window for
the company to put in place a chief executive that can give fresh
energy to the challenge of leading RBS through the next phase," Mr.
Hester wrote to staff.
U.K. Treasury chief George Osborne issued a statement Wednesday,
praising Mr. Hester's tenure but also endorsing his planned
departure, noting that "now is the right time to move on."
In the memo, Mr. Hester said endless scrutiny of the bank
"carries a cost," but that, for him, it has been offset by the
"warmth and support of colleagues from across the business to carry
on."
"This strength of teamwork is no more evident than in the
leadership team that exists in RBS today. It is the strongest such
team we could wish for and is well placed to steer the business
through the next phase of our journey to become a really good
bank," he said.
Mr. Hester's departure, which is set to happen by the end of the
year unless a successor is found sooner, comes as Finance Director
Bruce Van Saun prepares to leave the bank in October to take up the
role of CEO at RBS Citizens Financial Group Inc., RBs' U.S. retail
bank that is preparing to float in 2015. Nathan Boston, currently
chief risk officer, will take over as finance director and is being
tipped as a potential successor to Mr. Hester.
RBS Chairman Philip Hampton Thursday signaled that he too could
leave the bank, telling Bloomberg TV that he "has no plans to step
down at this stage," but that a natural time frame for a chairman
to serve would be between five and seven years. He joined the RBS
board in January 2009 and started the chairman job the following
month.
Mr. Hester told RBS employees that the bank's future success
"starts and finishes' with its focus on customers.
"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. If there is one positive legacy to
take from our past mistakes it must be that we never, ever forget
why we are here," he said.
RBS needed to be bailed out after the sharp turn in markets in
2008 pushed it to the brink of collapse, in large part because of
mounting losses within ABN Amro, the Dutch bank RBS bought in
2007.
Write to Margot Patrick at margot.patrick@dowjones.com
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