Banking Crisis

RBS CEO Slams "Political Interference" For Damaging Private Banking, Share Price

Wendy Spires Deputy Editor 16 December 2009


Stephen Hester, chief executive of Royal Bank of Scotland, has hit out at “political interference”, saying that actions such as curbs on bonuses and forced divestitures have damaged business units such as private banking, along with hitting the banking group’s share price, AP reports.

Having accepted billions of pounds of taxpayer bailout funds during the credit crisis, RBS – the parent of UK private bank Coutts – is now 70 per cent nationalised. The UK government has subsequently demanded the right to impose caps on bankers’ bonuses; RBS is also being asked to sell-off assets (insurance operations and commodity trading) by the European Commission to negate any unfair competitive advantage coming from the government bailout.

Speaking at a shareholder meeting convened to approve the bank’s participation in a government asset protection programme, Mr Hester is reported to have said that bonus caps imposed by the UK government will diminish RBS’s ability to retain and attract the best bankers, adding that key staff had been lost.

"Some pockets of our business such as private banking have lost staff. This has damaged our share price and damaged our shareholders, it is damaging, but containable. This is why we would love to be out of the political limelight as soon as possible,” Mr Hester is quoted as having said.

RBS’s participation in the government’s asset protection programme was approved by shareholders, allowing RBS to insure £282 billion ($457 billion) in bad debts and avoid the threat of full nationalisation, according to the report.

Rumours emerged earlier this month that RBS’s board had threatened mass resignations over the bonuses issues, which Mr Hester denied. He did reportedly say however that the bank’s board would formally challenge the government’s stance on bonuses.

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