THE Government’s hopes of returning the mainly state-owned Royal Bank of Scotland to the private sector have been damaged by its “cack-handed” handling of the departure of chief executive Stephen Hester, shadow chancellor Ed Balls has warned.
Mr Balls said the announcement that Mr Hester would be stepping down at the end of the year appeared to have been politically-driven - sending a “bad signal” about the conditions for doing business in Britain.
Speaking at The Times CEO summit in London, he said: “I thought the handling of the Stephen Hester departure was very poor and destabilising. It is no surprise that the taxpayer stake in RBS is worth £4 billion less today than it was worth the day before Stephen Hester announced his retirement.”
Both the Treasury and the bank denied reports that Mr Hester’s departure was the result of pressure from Chancellor George Osborne, but Mr Balls questioned the explanation that the board wanted a successor to take RBS forward for the next five years.
“If the reason why you want a transition is to give five years’ stability, which was the explanation on the day, then I would have thought what you do is make sure you are in a position to announce a successor for the next five years, and that didn’t happen,” he said.
“The appearance that this happened because of a political intervention is quite damaging and will make it harder and take longer now to get to where we want to be, which is RBS off the Government books and back into the private sector.
“I think the appearance of a mad dash on a political timetable was bad for the Government and for it to happen to Stephen Hester in the way in which it happened, I think, sent a bad signal around the world about the way in which Government is working with business. Politicians seeking to hire and fire individuals is the wrong kind of intervention.”
Mr Balls said the “cack-handed” way the decision was handled compounded the damage done by the Government’s decision to strip former RBS chief executive Fred Goodwin of his knighthood.
“Stripping one individual, whatever he had done, of his knighthood on the six o’clock news - driven by a politician announcing the decision - I thought that sent a pretty bad signal around the world about the kind of place Britain is to do business at the moment,” he said.