Stephen Hester is stepping down as chief executive of Royal Bank of Scotland, departing with a payment in lieu of notice of £1.6m.
In an announcement to the London Stock Exchange, RBS notes that its chief executive has to oversee the bank’s return to private hands and lead it in the years following but Hester “was unable to make that open-ended commitment following five years in the job already”.
The group will search for a successor immediately and will consider both internal and external candidates. Hester is expected to stay on until December 2013 to ensure a smooth handover, unless his successor is in post before then.
As part of his contractual arrangements, Hester will receive payment in lieu of notice of £1.6m representing one year of pay and benefits. He will not receive a bonus for 2013.
Hester says: “It has been nearly five years since I joined RBS after the bank was rescued by the Government. In that time we have reduced the bank’s balance sheet by nearly a trillion pounds, repaid hundreds of billions of taxpayer support, and removed the imminent threat that this bank’s size and complexity posed to the UK economy. All the while we supported 30m customers every day to help them manage their finances.
“We are now in a position where the Government can begin to prepare for privatising RBS. While leading that process would be the end of an incredible chapter for me, ideally for the company it should be led by someone at the beginning of their journey. I will therefore step down at the end of this year to allow a new CEO to lead the Group in this next stage.”
Hester was appointed to the RBS board in October 2008 and became group chief executive in November 2008. He has overseen the rescue of RBS and its restructure as part of a “strategic plan” to strengthen the business and the bank’s balance sheet following the financial crisis.
RBS chairman Philip Hampton adds: “On behalf of the board I would like to thank Stephen for his leadership and dedication over the past five years. In the midst of a major crisis, he accepted the challenge of stabilising the bank, turning it around, and putting us in a position where we can begin to plan for returning the organisation to the private sector. His achievements have been considerable.”