A LITTLE more light was shed yesterday on the ousting of Stephen Hester from the bridge of the good ship (bad ship?) Royal Bank of Scotland.
Robin Budenberg, the outgoing chairman of UK Financial Investments (UKFI), the semi-quango running the taxpayer stakes in RBS and Lloyds, repeated the official line at the Treasury select committee that it was the bank board’s decision for Hester to depart ahead of any re-privatisation.
All parties have stuck to this explanation, even though rumours were rife in the City and Whitehall that relations between the former RBS boss and Chancellor George Osborne had frayed beyond repair because Hester was not making the bank the linchpin of the UK recovery as quickly as Osborne wished.
However, Budenberg revealed to MPs that, while not initiating the pressure for Hester to leave, UKFI had helped speed up his removal through its advice to the RBS board.
“Our view was that it made sense to have a new chief executive in place before RBS returned fully to the public sector,” Budenberg told MPs.
“Given that, we felt it was better to make that change sooner rather than later.”
The RBS board had already been mulling the matter, but he acknowledged UKFI’s advice “was important in terms of acceleration, yes”.
In terms of actual procedure and timeline, perhaps it did go exactly as RBS has said, with the board being the final arbiter of Hester’s departure after five years of pretty successfully turning the inherited banking basket case around.
But if as a chief executive you know your 81 per cent shareholder wants you to go, and that this powerful shareholder’s boss – the Chancellor – seems to have your hat and coat in his hand, only the most brass-necked and tin-eared boss would not take the hint.
Hester spent five years cutting RBS’s losses, and in the end, with rising mood music around him, cut his own.
Inflation dip is good news for Carney
THE sharp fall in inflation to 2.2 per cent in October from 2.7 per cent in September is good news for the Mark Carney-walks-on-water fan club.
At the least, it makes the newish governor of the Bank of England look not quite so left-field in suggesting interest rates might not need to rise until 2016.
While forex markets were sceptical of that forward guidance, the latest inflation number does indicate that the Bank can keep monetary policy loose amid a gathering recovery without feeding inflation. However, Carney might care to enjoy it while he can because bumps in the road loom. The October fall in inflation reflected a much smaller rise in university tuition fees this year. While November’s figures will include a bigger than expected jump in gas and electricity bills.
Even so, let’s enjoy it while we can. The Bank is also set to cut mid-term inflation forecasts and raise growth estimates today.