Newspaper article The Journal (Newcastle, England)

Taxpayer-Backed RBS Facing Uncertain Future

Newspaper article The Journal (Newcastle, England)

Taxpayer-Backed RBS Facing Uncertain Future

Article excerpt

Byline: BANKING Coreena Ford? 0191 201 6331 ?

TAXPAYER-BACKED Royal Bank of Scotland was last night facing an uncertain future as it began the search for a successor to chief executive Stephen Hester and confirmed it was shedding 2,000 investment banking jobs.

Shares were down 4% as markets digested the news that Mr Hester was to leave before the Government's 81% holding in RBS is returned to the private sector - amid speculation about political interference in the decision.

Ministers denied direct involvement but MPs were told Chancellor George Osborne had met the bank's chairman last week to discuss the move.

There was anxiety about whether the departure could delay privatisation plans and speculation that it would increase the likelihood of RBS being split into a good bank and a bad bank.

Mr Hester is to leave later this year and will get 12 months' pay and benefits worth PS1.6m, as well as being in line for a long-term shares windfall of up to PS4m. He will receive no bonus for 2013.

In a thank-you memo to 100,000 staff, he stressed just how dire the group's predicament had been during the financial crisis in 2008. He said: "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."

The overhaul of the bank since its bail-out has seen thousands of jobs go. Sources at the bank today confirmed that 2,000 worldwide jobs at the bank's investment banking arm would go over the next two years. The division has already shrunk from a high of 24,100 to 11,300 last year.

It was not clear how many UK staff will be affected by the latest cull but the group's Asian operations are expected to take the brunt of the cuts. In the House of Commons, Sajid Javid, Economic Secretary to the Treasury, said: "The Chancellor has not been directly involved in meeting with Stephen Hester prior to the announcement of his departure. …

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