Saturday profile: Nathan Bostock

IN GAME theory, a zero sum game is described as an interaction where there is a winner and as a result there is a loser as well.

Chancellor Alistair Darling is hoping his latest bank bail out, the asset protection scheme, does not turn out to be zero sum – with the banks winning at the expense of the tax payer.

Stephen Hester, the beleaguered chief executive of RBS, this week was the first in line to play the Chancellor's game. He signed up to underwrite 325 billion of the bank's dodgy assets while also taking a further 25.5bn injection.

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The big question is will it work? It will if Hester's new right-hand man Nathan Bostock has anything to do with it.

Although most of the headlines over the past few days were dominated by Hester's predecessor, Sir Fred Goodwin's grand 693,000 pension scheme and the bank's equally grand 24bn losses, the announcement of Bostock's appointment was subtle.

Bostock's job, starting in June, will be to run RBS's three to five year "non-core" programme overseeing the disposal of about 540nn in RBS assets, including the nasties earmarked for the Treasury's "big broom" bad asset protection scheme.

Why Bostock? Perhaps it is because he will be returning to familiar territory. He did, after all, spend nine years at RBS where he ended up as head of risk in 2001.

His career there spans the time of George Mathewson handing the reigns over to Goodwin and ends with the digestion of Nat West, which RBS acquired in 2000. Most in the industry agree the bank's appetite for risk grew sharply after he left and when he returns to work with Hester there will be little to remind him of the old days.

It turns out Hester knows Bostock rather well. When Bostock left RBS, he went to Abbey National. At the time Abbey faced what were then unprecedented challenges, revealing losses of nearly 1bn. Although such figures may appear quaint in retrospect, the crisis heralded the arrival at Abbey of the renowned bank trouble shooter Luqman Arnold and his trusty sidekick, Hester.

Together, Hester and Bostock created the "portfolio business unit", a carpet under which to sweep Abbey's "non-core" assets, mainly a collection of toxic collateralised debt obligations.

Earlier this week Hester revealed plans for a similar unit to take what are deemed to be RBS's non-core assets, albeit on a vaster scale. Writedowns at RBS's unit have already hit 17bn. Assets to be sold – or otherwise – are estimated to be worth 540bn and stretch across Europe, Asia and include most of the bank's more exotic assets, many picked up like a rash following RBS's unwise acquisition of ABM Amro.

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As Sandy Chen, a leading bank analyst at Panmure Gordon, points out, Bostock faces one of the toughest jobs in banking.

"It is not exactly a seller's market. There is buyer shrug going on in terms of almost any kind of assets. In some ways, Nathan's role is going to be managing or running down a portfolio rather than selling a portfolio because much of it will be worthless or even value destructive."

The return to RBS marks another homecoming for the Scottish chartered accountant. A still young 48, Bostock started his career at Coopers & Lybrand before spending four years working in risk analysis and interest rate derivatives for Chase Manhattan Bank.

Although the areas the young accountant was working on were complex, it would have been a dawdle for Bostock, who grew up the son of an academic applied mathematician who specialised in game theory.

Nevertheless Bostock is not in an ivory tower pondering the mathematical formula of strategic situations.

One former colleague, a senior banking figure said: "He is much more of a deliverer. He gets on with things and gets things done. He is very competent."

Clearly Bostock prospered at Abbey. Following the sale of Abbey to Banco Santander for 9bn, Hester left while Bostock succeeded him on the board. Bostock is credited with chasing and then integrating the group's acquisition of Bradford &Bingley, which will have acquainted him well with the leading government figures involved with bailing out banks – if he hadn't known them well already.

His former colleague says: "The Spaniards are quite tough. If they hadn't been impressed with him they wouldn't have kept him on either."

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So why go from Abbey which , by virtue of being owned by a Spanish group, is lower risk game? Industry watchers suggest Bostock had hit the limit of his ambition there. To go any higher would require a move to Madrid or to the US.

Instead, by going back to work with Hester, Bostock can stay at his farm outside Maidstone in Kent and become a bigger player in an admittedly more rough and tumble match.

This mission, he has clearly chosen – Bostock's resignation from Abbey was announced on Wednesday, and his appointment at RBS on Thursday.

Abbey chief executive Antonio Horta-Osorio's good wishes for Bostock's new career were publicly gracious, and a spokesperson said the bank would be "sorry to see Nathan go but understand his desire to take up a new challenge".

The job of fixing RBS's major problems may be a good one, but it does come with a fixed deadline.

It may be that the job only has five years to it, and where he goes after – in this banking landscape – is anyone's guess.

But as Chen points out, five years now in banking is a long time: "It is a lot longer job prospect than a lot of us in the City have".


NATHAN Bostock, 48, is an accountant by trade, having trained with Coopers & Lybrand and qualified in 1985 at the age of 25.

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From 1988 to 1992, he worked for Chase Manhattan Bank, where he had the unwieldy title of head of risk analysis and finance, treasury and interest derivatives (Europe).

In 1992 Bostock joined RBS. There he was involved in re-designing the group's risk management strategy and also integrated the capital markets business from the sale of Charterhouse bank. When his predecessor, the "sage-like" Derek Sach, took a year's secondment to sort out the new RBS joint venture, Tesco Personal Finance, Bostock became RBS's head of risk.

In 2001 he became chief operating officer of Abbey's treasury services group.

After Luqman Arnold and Stephen Hester took over in 2002, Bostock oversaw the winding down and disposing of all the bank's non-retail assets.

A father of two sons, Bostock is an avid fan of Scottish rugby.

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