Royal Bank of Scotland group chief executive Stephen Hester is stepping down later this year.
In a statement posted on the London Stock Exchange, RBS says Hester was unable to make an “open-ended commitment” to continuing as chief executive once the bank has returned to the private sector.
Hester was appointed to the RBS board in October 2008 and became group chief executive in November 2008. He has overseen the rescue of RBS and its restructure as part of a “strategic plan” to strengthen the business and the bank’s balance sheet following the financial crisis.
RBS says as the bank is now preparing for the Government to sell its stake in the business, Hester and the board agreed now was the time to “transition” the bank’s leadership.
Hester will continue as RBS chief executive until December. When he leaves he will be paid £1.6m representing 12 months pay and benefits. Hester will also qualify for a pay award under a share scheme which is valued at £3m as at today’s share price, but could rise to just over £4m. He will not receive a bonus for 2013.
RBS chief executive Stephen Hester says: “It has been nearly five years since I joined RBS after the bank was rescued by the Government. In that time we have reduced the bank’s balance sheet by nearly a trillion pounds, repaid hundreds of billions of taxpayer support, and removed the imminent threat that this bank’s size and complexity posed to the UK economy.
“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.”
RBS chairman Philip Hampton says: “On behalf of the board I would like to thank Stephen for his leadership and dedication over the past five years. 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.”
Chancellor George Osborne says: “When Stephen Hester took on the job at RBS in 2008 it was a bust bank with a broken culture and posed a huge risk to financial stability. RBS today is safer, stronger and better able to support its customers. I want to commend Stephen Hester for everything he has done to make this turnaround possible.
“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.”