More than £1.5 billion was wiped off the value of the taxpayers’ stake in RBS today as the City reacted with dismay to the “politically motivated” departure of chief executive Stephen Hester.
Shares in the banking giant, which is 81 per cent publicly owned, slumped almost six per cent following Mr Hester’s surprise announcement that he will quit by the end of the year.
The drop came as the political fall-out from his decision to leave — with a cash and shares payout worth up to £5.6 million — deepened. There has been speculation that the move followed a disagreement with Chancellor George Osborne over the timing of any privatisation.
But in the Commons, Treasury minister Sajid Javid said that RBS would now move to a new phase, in which it would focus on helping the economy to grow.
RBS also announced today that it is cutting 2,000 jobs from its investment banking arm, about a fifth of the total. They are expected to be concentrated in Asia with a few hundred posts going in the City. Analysts said the 18.9p fall in the share price to 306.7p will make it even harder for the Government to realise its ambition of selling its shareholding. Mr Hester played down reports that he had been made a “fall guy” by Number 11.
In an interview with Radio 4’s Today programme he said he had never had “an unhappy conversation” with George Osborne and revealed there had been no contact with the Chancellor in the days preceding his resignation.
He added: “I want to dispel any issue or problem around this. I’m not feeling bent out of shape or disappointed. This is a job that half of me will be delighted to have over. The other half of course I would like to be in the trenches with my people to finish it off.”
He suggested complete privatisation of RBS would take several years. “The bank is already very close to being in a state where it can be privatised. The faster privatisation can start, in my view, the better... The lowest price the Government paid for its current shares was £3 a share, which is roughly where the share price was… lower than the share price was yesterday — the highest price was £6. I think that that range can be achieved over the coming years and therefore it can be done.”
Former City minister Lord Myners told BBC2’s Newsnight that Mr Hester had “made it very clear he didn’t really want to go now”. “He’s going because the board has said he should go and I think they are doing the bidding of George Osborne.” RBS had to be rescued at the height of the banking crisis in autumn 2008 when it was hours from a collapse.
