RBS chairman McKillop quits as new regime strengthens its hold

Published on Tuesday 3 February 2009 20:44

THE new top pairing at Royal Bank of Scotland tightened their grip on the chastened institution yesterday as chairman Sir Tom McKillop stepped down abruptly three months ahead of schedule.

Sir Philip Hampton, appointed as deputy chairman and chairman-designate of the bank only last month, now takes over immediately.

The surprise move comes a week before McKillop and erstwhile RBS chief executive Sir Fred Goodwin are due to appear before the Treasury select committee to answer questions about the bank's fall from grace.

Stephen Hester replaced Goodwin as chief executive in the autumn, and the swift succession of Hampton was seen yesterday as the two putting their stamp on the bank's current strategic review.

RBS is also searching for three new non-executive directors.

McKillop, 65, who had been criticised for not checking Goodwin's allegedly "serial acquiror" tendencies, had been due to retire at the April AGM.

But he said yesterday that he believed it was "appropriate to bring this forward so that Sir Philip can complete the restructuring of the board and work with the board and executive teams on the strategy going forward".

Hester recently flagged up a 28 billion loss for 2008 under the previous management at the bank, in which the government has a 70 per cent stake following a taxpayer bail-out.

Hampton is chairman of Sainsbury's and a former chairman of UK Financial Investments, the arm's-length agency set up to monitor the government's holdings in banks. Hampton said McKillop "has chaired RBS through unprecedented turbulence in financial markets with great dedication and integrity". The new chairman said the bank faced "significant challenges", but that it was "extremely fortunate to have the support of the UK government and taxpayer and we mean to repay that support as soon as is practicable".

McKillop's withdrawal – he remains a non-executive director of BP – comes a week before the select committee appearance.

Andy Hornby and Lord Stevenson, chief executive and chairman of HBOS, now 43 per cent owned by the taxpayer, will also appear before MPs. Hester will appear the following day.

It is understood McKillop, whose basic salary was 750,000 at RBS, will not receive any special payments for early loss of office. His salary at BP, where RBS non-executive Peter Sutherland is chairman, is about 87,000.

Simon Willis, banking analyst at NCB Stockbrokers, said: "I don't know if McKillop was forced out early, but it probably suits both sides at this stage."

Stewart Hosie, the SNP's Treasury spokesman, said: "It makes sense to clear the decks to allow the new management team (at RBS] to get on with the job.

"However, we do need to guard against the Prime Minister using this early departure as a way of drawing a line under the banking crisis and pretending everything is fine. There's still a great deal of work to be done."