Saturday 23 September 2017

RBS boss quits just days after claims of 'back-door bailout'

Sarah McCabe

Sarah McCabe

ROYAL Bank of Scotland chief executive Stephen Hester is unexpectedly resigning.

It comes just days after the Government here was forced to defend accusations that money his bank pumped into subsidiary Ulster Bank amounted to a "back-door bailout".

Mr Hester has led RBS for five years after parachuting into the role during the 2008 financial crisis. Since then, the British government has pumped £45.8bn (€53bn) into the bank to keep it afloat, and now owns four-fifths of it.

The bank is now preparing for privatisation. UK Prime Minister David Cameron had been piling pressure on Mr Hester to hurry up the process and said the bank should be made ready for sale "as fast as possible" earlier this month.

But Mr Hester said yesterday that he was not in a position to see out another five years at the bank while it was privatised, and would leave later this year.

The announcement, made after markets had closed in Ireland and the UK, will come as a surprise to investors and regulators alike. He had privately suggested that he was keen to oversee the beginning of the privatisation process.

The news comes as the dust settles on the UK's 'The Times' story that called RBS's injection of cash into Ulster Bank a "back-door bailout" worth about £10bn (€11.7bn) for Ireland.

RBS has pumped £14.3 (€16.8bn) into Ulster Bank since the crash, a third of the entire cost of rescuing the British institution. 'The Times' reported that one Tory Minister said the British government "missed a trick" by failing to hand Ulster Bank back to the Irish government in 2010.

But in an interview last week with this newspaper, Mr Hester denied that RBS would sell or shut down loss-making Ulster Bank.

A high-powered commission of MPs and Lords are also reportedly about to recommend breaking up the taxpayer-backed lender into 'good' and 'bad' sections. It is not yet clear how this would affect Ulster.

Irish Independent

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