THE search for a new chief executive for Royal Bank of Scotland has extended beyond the banking sector because of a shortage of potential recruits.
Sainsbury’s chief executive Justin King is among the names being thrown into the hat, although a candidate from within the financial services sector remains most likely to replace Stephen Hester, who announced on Wednesday night that he is leaving – with Tesco Bank boss Benny Higgins emerging as a possible candidate last night while Lloyds deputy chairman David Roberts, who also worked at Barclays, is thought to be on a short list.
There was also growing speculation yesterday that RBS chairman Sir Philip Hampton could step down alongside Hester after five years in the post.
City sources said RBS faces an uphill task in finding a new chief executive from a small pool of suitably qualified candidates. It is understood that RBS has appointed Anna Mann of MWM Consulting to lead the search.
Whoever gets the job will have to steer it through privatisation and therefore need and ability to win the support of investors and politicians.
Shares in the company tumbled as the markets showed displeasure at Hester’s departure by the end of the year.
In a memo to staff, seen by The Scotsman, Hester said the bank had come “close to the point of collapse” and that the decision to leave had not been easy.
He will step down after the board decided it wanted new leadership to oversee the sale of the taxpayer’s majority stake in the bank, which could take years.
Since the UK government pumped £45.8 billion into RBS, giving it an 81 per cent stake in what was once the largest bank in the world by assets, there has been a constant tension between the bank’s management and politicians trying to influence its strategy.
Hampton said on Wednesday that Hester had been unable to make the necessary open-ended commitment to remain in the job at RBS, which the government bailed out during the 2008 banking crisis.
Investors took the news badly. RBS shares closed down 3.3 per cent at 315p after earlier dropping more than 6 per cent, far below the 407p price the government regards as the break even on its investment.
During his five years at the helm, Hester oversaw a massive shrinking of the RBS balance sheet, all the while parrying criticism from politicians about the strategy and the size of his bonus. Only a small number of people would meet the criteria for a new chief executive and Hampton, who will lead the search, admitted there wouldn’t be a large number of candidates.
Heinz Geyer, managing director of Temple Associates, a consulting and recruitment firm for the financial services industry, said: “There is a relatively limited pool of people. You also have the problem that it is a little bit of a poisoned chalice because of the interference of the politicians.”
King has rejuvenated the fortunes of retailer Sainsbury’s over the past ten years, the first six of which he was working with Hampton as chairman. There have been rumours King is ready for a new challenge.
Other external candidates touted include Richard Meddings, finance director at Standard Chartered. However, an investigation into breaches of anti-money laundering activities at that bank last year may count against him.
Internal options would include finance director Bruce Van Saun, who is scheduled to move to a new role running the bank’s US business, Citizens, preparing it for a flotation. Another is Nathan Bostock, currently head of restructuring and risk and a former Abbey National finance chief, who is to succeed Van Saun as finance director.