Stephen Hester is going the way of Bob Diamond, albeit with less acrimony. This afternoon, Hester said he’s ‘stepping down’ as chief executive and will be letting someone else take RBS private. Hester’s departure will take place sometime over the next six months. RBS said the search for Hester’s successor will begin immediately.
‘Of course I’d like to have stayed. I feel I’ve been in the trenches with all my people,” said Hester in a video statement. He added that he felt very proud of what had been achieved at RBS and “huge affection and loyalty” for the staff there, but that it had also been a “bruising and difficult job” from which he wasn’t exactly being “prised away reluctantly.”
Hester began his career as an investment banker at Credit Suisse. The clear danger is that his replacement will have a retail banking background and that RBS’s investment bank will be split-off or end up even more de-emphasized than it is already. Hester said it was the board’s decision that he leave the bank.
The extent to which the UK government influenced Hester’s exit remains unclear, but David Serra, co-founder of hedge fund Algebris Investments, was seen entering Downing Street with a proposal for restructuring the bank yesterday. If the UK government is seen as having a very large role in Hester’s departure, it will make it even harder for the bank to find a strong replacement. Richard Meddings, finance director at Standard Chartered and a former PWC accountant and group comptroller at Barclays are among the mooted successors.
It’s not clear what Hester will do next. In a long interview with the Financial Times last weekend he revealed a strong interest in gardening.
Let us know what you think about Hester’s exit below.