RBS boss Stephen Hester ‘considered resigning’ over bonus row
Stephen Hester: Demonisation of Goodwin is bad for Britain. Picture: Sean Bell
ROYAL Bank of Scotland boss Stephen Hester revealed today he had considered resigning over the political furore surrounding his £1million bonus, and admitted that he had “underestimated” the row it would cause.
But Mr Hester, chief executive of the 83 per cent state-owned bank, said he believed it was essential to defuse the “timebomb” of the bank’s balance sheet for the benefit of the taxpayer.
“In the end, I came to the conclusion that it would be indulgent for me to resign,” he told BBC Radio 4’s Today programme.
Mr Hester said he decided to waive the bonus - to be paid in bank shares - because of the damage the row was doing to the bank.
“I took the judgment that it was going to be damaging for RBS to stay in the intensity of the spotlight that we had got into,” he said.
While he said he had “great sympathy and understanding” for people concerned about the high rewards in the banking industry, such “societal issues” were ultimately a matter for politicians.
He said it was essential that RBS was able to recruit the best people to resolve the problems it had inherited from the former management, which led to it being bailed out by the taxpayer.
“When I was asked to take on this job three years ago, I had to replace the whole senior management team of RBS,” he said.
“We had to go around the world looking for the best people, not just people to run a bank well, but people to defuse the biggest timebomb in history in terms of bank balance sheets.
“Those people are doing a good job. I think they deserve recognition. If they do a good job, it is our task to make sure that there is a connection between the job people are doing and how they get treated.”
Mr Hester acknowledged that bank bonuses were controversial but said RBS had not realised what a storm his award would create.
“I understand why these issues are controversial - particularly in a time of austerity. Of course, we underestimated that, going forward,” he said.
He admitted the banks had been guilty of “hubris” after 20 years of “unbridled expansion” leading up to the crash of 2008.
“I think in the case of the banking industry there was over-confidence and, with the benefit of hindsight, over-rewards,” he said.
However he warned it was important not to “demonise” a sector which remained essential to the economy.
“Let’s not demonise a whole industry. Let’s not demonise something that is fundamental to the world economy,” he said.
“Banking is important, financial services is important. It supports the economy, it supports millions of jobs and we need to remember that.”
While he acknowledged that as a largely state-owned organisation, RBS would be held to a higher standard than other banks, he said it could not be treated completely differently.
“It may make our job more difficult. We have to try to behave in a way that also leads on some of these difficult issues of how we interact with society,” he said.
“We can’t be completely different from all the people against who we compete but I accept that we need to have a sensitivity.”
He added: “We would make a mistake as a society if we forget how wealth is generated, how successful people are motivated.”
He said the continuing controversies over RBS since its rescue by the taxpayer three years ago had taken their toll on him personally.
“I am certainly not a robot and there have been some deeply depressing moments,” he said.
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Comments
There are 22 comments to this article
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Tarheel Chief
Friday, February 10, 2012 at 06:22 AMThe term irreplaceable,indispensible,star often occurs in politics,medicine,marriage,law,sports,and showbusiness. Let us assume the banks in Scotland can survive and prosper without the efforts of this man.If he quits,maybe he sees how incomptetent his associates have become over the past four years of testing.
runaway
Thursday, February 9, 2012 at 10:44 AMYeh. and we would have stopped you...Never ceases to amaze me , in the real world if you are a failure you get sacked, but in their world if your a failure you get rewarded...law for the rich.?
duelaynomore
Thursday, February 9, 2012 at 02:13 AMI am pleased that he did not resign. I don't know him myself, but I feel that he has done the honourable thing in the circumstances. Most people who negotiate a contract, would not forgoe agreed earnings just because the climate had changed. STORIES FROM OUR CHILHOOD RE_INFORCE THIS SUCH AS IN THE PIED PIPER OF HAMLIN. Renege on your deals, and suffer the consequences...persuade him to accept..much different .
duelaynomore
Thursday, February 9, 2012 at 01:58 AMProblem here was that there were to many eggs in the one basket.
Pa broon
Wednesday, February 8, 2012 at 06:29 PMIt's probably time to take this a little further and examine all bonus payments for executives in the public sector for which tax payers we have direct control. To many in Quangos get a golden hello, a good salary; and if they muck it up a golden parachute to boot. Some of the money recently paid to get rid of these people when they preside over disasters is mind boggling. NHS executives are another lot that need to be looked at. It's not just a culture within the banks that is a problem it is executive pay in general. Both in the private and public sectors. Network rail maybe not for profit but they seemed to be lining up a nice little earner before they were rumbled. Pay them a good salary; pay them an exceptional salary, but if they don't achieve the contracted result sack them without any additional monies out with normal entitlement.
mallus12
Wednesday, February 8, 2012 at 04:37 PMAll the furore regarding the bonuses for RBS and others is a direct result of BROWN and DARLING's failure to do the obvious. At the time of the bank bailout they should have made it crystal clear to Goodwin and his fellow gamblers that the bailout carried the absolute condition that there were to be NO bonuses until the taxpayers had ALL their money back. Milliband is making a meal over this issue but the failure is entirely due to his party's supposedly financial experts.
Rhynieman
Wednesday, February 8, 2012 at 02:56 PMOh diddums....spit out the dummy...shows the calibre of these people
Snoopy1
Wednesday, February 8, 2012 at 12:58 PMAs the old saying goes "If you cannot stand the heat,do not take on a job in the kitchen or the boilerhouse"maybe he would be better in a job in the bottling plant,as it seems he is not up to taking the pressure's of the job that the taxpaying public are paying him for,£1.5 million a year plus a £965,000 share option bonus,because there are people who put there lifes on the line every day such as our troops,for a fraction of that,with no share option bonus. Mr Hester like some of our politicians want to get there heads out of the clouds,and there feet firmly back on the ground,before they moan and groan about doing a hard jobs that puts them under pressure,that they need to be large salaries to help them cope with the pressure,the message is this if you cannot do the job,then move over,as there are people out there who will do there jobs for a lot less.
Sinclair Dunnett
Wednesday, February 8, 2012 at 12:57 PMThe west has become so rich and able to afford things like health care for all, free at the point of use (even for those who contribute nothing to the economy), because of the marketcapitalist system. An important part of that system is the banks. Yes, some things have gone badly wrong in the past few years; but one might remember the words in the Book of Job: "What? shall we receive good at the hand of God, and shall we not receive evil?" - I quote this because I think it is applicable, not because I subscribe to Christianity or Judaism. Demonising bankers like Stephen Hester is unsavoury and the politics of envy, and may damage our economy in the long run - see an article by Schumpeter in a recent Economist.
Willie Boy
Wednesday, February 8, 2012 at 12:10 PMDo i hear the honour of sainthood being mentioned for Mr Hester or has his bonus just been delayed till the hullaballoo dies down.
Alan Craigie
Wednesday, February 8, 2012 at 12:05 PMGuys like Hester are a dime a dozen yet wer're told if we don't pat them millions we won't get anyone. B.S.
Stewart_in_Oz
Wednesday, February 8, 2012 at 12:02 PMHe may be a banking genius. He hight have a double first in Economics and other esoteric subjects, but he obviously is a bit slow on the uptake about how much the poor middle and lower classes view Bank Bonuses. Especially when the middle classes and the lower classes have just seen the government bailing out the bank because it had just made such a shambles in the previous years in its transactions. A stiff dose of reality might be a shock to the system, but very necessary. He could try WORKING for a living.
Tintock Pete
Wednesday, February 8, 2012 at 11:56 AMSelf certified mortgages, giving mortgages and loans to those on benefits, consolidation loans???? Yes well done those bankers.
Niebiosa tam sa naprawde nieskrzydlowe ludzie tam
Wednesday, February 8, 2012 at 11:22 AMIf he really is "suffering" away in the present post, can I , for one, suggest he resign. I'd hate to think he was suffering sooo much just for my benefit. If there is a better job going somewheres else, then "get on yer bike" and pedal off
Tintock Pete
Wednesday, February 8, 2012 at 11:18 AMHow much are you paying back in PPI mis-selling? Yes, good job, well done etc......What happened to my old neighbours private pension? Yes, good job, well done etc....Do you take charges from old widows pensions or benefits? Yes, good job, well done etc.....Chucked any disabled children out into the street because mum or dad lost their job? Yes, good job, well done etc. What would we do without banks eh?
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