New Zealander McEwan, who joined RBS a year ago to run the retail bank, will take over in October
A low-profile New Zealander has been named as the new boss of Royal Bank of Scotland on a salary of £1m a year, the bailed-out bank announced on Friday when it reported £1.4bn of profits.
Ross McEwan, who joined RBS a year ago to run the bank's retail arm, will take over from Stephen Hester, who was parachuted in to run the bank following its £45bn taxpayer bailout.
In a sign of the change of direction at the 81% taxpayer-owned bank, McEwan immediately waived his bonus for 2014 and will have his bonuses from 2015 onwards linked to the share price at which the taxpayer paid for its stake. His salary is less than the £1.3m his predecessor received.
The 56-year-old is taking charge when the government is considering whether to carve out a "bad" bank to make it easier to privatise in the future and his background in retail banking will spark speculation that he will further shrink the investment bank.
Sir Philip Hampton, the RBS chairman, attempted to play down the idea that external candidates had walked away from being considered for the role. He also spelt out that the government could be prevented from creating a bad bank by the remaining shareholders who would need to vote on any such move.
The RBS results contained another £185m provision for mis-selling payment protection insurance, taking the total bill to £2.4bn, and an unusual charge of £385m to cover legal costs associated with unspecified regulatory actions which indicates it faces further fines from global regulators. In total, charges for legal action and regulatory actions is £620m.
The first half results of RBS demonstrated its contrasting fortunes with Lloyds Banking Group, where the government is expected to start selling down its stake soon. On Friday, shares in Lloyds continued to trade higher than the 73.6p the taxpayer paid for its 39% stake at above 74p – giving the chancellor chance to start selling at profit. But shares in RBS were down nearly 3% at 334p, well below the average price of more than 500p at which the 81% stake was bought in the bank.
Hester, who took over a bank in 2008 that made a record £24bn loss, said: "It really is good news that RBS is back in the black". The bank made it first two consecutive quarters of profit since 2008.
He will now leave on 1 October and described McEwan as a "person of integrity who has been a valued colleague over the past year". He had convinced him to move from Australia - where had been working at Commonwealth Bank of Australia. "I promised him an adventure and I think he will accept that an adventure is what we've delivered," said Hester.
Hampton has signalled that he will leave once the new chief executive has settled into the role and described McEwan as "the strongest candidate". "Pay wasn't an issue. Ross was very aware of the external pressures on banking pay. He wanted to make some gestures," said Hampton.
Any bonus McEwan could receive for 2013 while was running the retail bank is to be deferred to 2017 and then "subject to conditions around share price and extent of government sell down designed to allow taxpayers to gain value first".
He said: "We are a bank that millions of British families have entrusted with their finances. We support more companies – from the very smallest to the very biggest – than any other bank in the UK. Our international business helps customers access global markets and export goods and services around the world."
His appointment was welcomed by the chancellor. "He's impressed me with his vision of RBS as a strong, UK-centred corporate bank that is focused on supporting the British economy.
"He's committed to a new culture at the bank that puts the customer first, whether it's the family or small business or large company.
"I think he'll provide the leadership RBS needs as the bank puts the mistakes of the past behind it, and the government seeks to get the best value for the taxpayer from the money the last government put into the bank," George Osborne said.
In the same period last year RBS reported a loss of £1.5bn.
Article Source : http://www.guardian.co.uk
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