Royal Bank of Scotland chief executive Ross McEwan has promoted one of his key lieutenants as he seeks to recover from a string of setbacks at its retail banking division.
Les Matheson, who joined from Australian lender St George Bank four years ago, is to take charge of the state-backed group’s retail arm, just weeks after it set aside almost £1 billion extra to compensate customers who were mis-sold payment protection insurance (PPI) and complex interest rate hedging products.
McEwan is also searching for a new finance director after Nathan Bostock revealed in December that he was quitting after less than three months in the role to become chief risk officer at Santander UK, where he will also serve as deputy to the Spanish-owned lender’s chief executive, Ana Botin. RBS is expected to give an update on the hunt for Bostock’s successor when its annual results are published at the end of this month.
The figures will show that RBS’s total PPI provision has reached £3.1bn, while £1.25bn has been set aside for mis-sold interest rate swap products. These provisions, together with a £1.9bn hit related to the sale of mortgage-backed securities and other “regulatory decisions” could push the group to a deficit as big as £8bn, which would be the largest since it racked up losses of £24.1bn in 2008.
The results, due on 27 February, are expected to be accompanied by the outcome of McEwan’s wide-ranging review of the bank, which has admitted that SME lending practices need to improve following a damning report by former Bank of England deputy governor Sir Andrew Large.
While branch managers could be put back in charge of small business lending in a bid to cut costs and speed up the decision-making process, there is also widespread speculation that further cutbacks are planned, involving job losses and branch closures.
The bank, 81 per cent owned by the taxpayer, has also suffered a number of IT meltdowns in recent years and McEwan admitted in December that the group had failed to invest properly in its systems “for decades” after customers were locked out of its online banking and ATM network on one of the busiest shopping days of the year.
Matheson has been running the retail unit on an interim basis since September, when McEwan – the division’s previous boss – succeeded Stephen Hester as group chief executive.
Hester took the helm of embattled More Than-parent RSA last week as the insurer tries to move on from an accounting scandal at its Irish business, which led to the resignation of former chief executive Simon Lee.
Announcing Matheson’s promotion, McEwan said: “Les has done a great job leading the retail bank over recent months, bringing a wealth of banking and customer experience to the role.
“I am delighted that the best candidate came from within our bank. Les has successfully driven through important changes to make RBS a much simpler and more effective bank for our customers.”
Matheson added: “Every day I am struck by the hard work and enthusiasm of our staff, and their commitment to do the right thing for customers.”