Who pushed Hester?


Here is why RBS's board negotiated the departure of Stephen Hester.

A month ago, the chairman of UK Financial Investments, Robin Budenberg, told the chairman of RBS, Sir Philip Hampton, that the Treasury wanted to begin the privatisation of the bank at the end of 2014.

UKFI manages the government's 81% controlling stake in RBS, so Sir Philip is in no position to ignore what it says.

Mr Budenberg added that this timetable implied that the time had come for Mr Hester to stand down as chief executive of RBS.


Well by the end of 2014, Mr Hester would have been RBS's boss for six years.

Which means that no investor would then believe he would stay much longer.

Mr Budenberg, a former investment banker, told Sir Philip that it would be much harder to privatise RBS - to sell shares in the bank - if there was widespread speculation at the time that the chief executive was poised to quit.

There would be too much uncertainty about the future direction of the bank.


Far better therefore for Mr Hester to depart by the end of 2013, allowing a successor nine months or so to run the bank and develop a strategy, prior to the government beginning to offload its stake.

Sir Philip and RBS's board accepted UKFI's argument, which sealed Mr Hester's fate.

Oh, and there is another thing.

It is an open secret in the City that Mr Hester and the chancellor don't get on.

That had two consequences.

First, it was made clear to Sir Philip that the chancellor was keen for Mr Hester to be replaced.

Second, the RBS board was not very resistant to the idea of Mr Hester going, because the directors felt it wasn't optimal that its chief executive should be on difficult terms with any chancellor of the Exchequer, let alone one who is - in effect - their biggest shareholder.

Update 1835:

The Treasury insists that there is no formal timetable for privatisation and says it never told Sir Philip it had to happen at the end of 2014.

But as it happens that is consistent with UKFI telling RBS it has to be ready for sale by the end of 2014.

The other interesting thing that the Treasury has confirmed is that - as Stephen Hester told me yesterday - the process of selling all the 81% taxpayer stake will probably take several years.

Also, for what it's worth, a friend of the chancellor insists that their relationship isn't bad. Even today, he said, Mr Hester and Mr Osborne had a "friendly and good-natured" chat.

Which makes it all the stranger that everyone I've spoken to around Mr Hester says the two don't get on.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

Living standards not quite back to peak

Living standards for a typical family are back to where they were before the recession, says the IFS, although not for those 30 and under.

Read full article

More on This Story

More from Robert


This entry is now closed for comments

Jump to comments pagination
  • rate this

    Comment number 19.

    Sale of shares to fund pre-election tax giveaway in Budget 2015. Osborne didn't make this clear to UKFI? Do bears **** in the woods?

  • rate this

    Comment number 18.

    At a rough guess because everything so opaque for some reason, but if the government sold a share every second it would take 300 years to sell off this abject failure. 2014 your having a laugh!!!!!

  • rate this

    Comment number 17.

    It would make more sense to me to sell the Shares on the open Market, that would achieve the best value for UK Citizens.

    Giving people something they've already paid for will not be popular, and it won't make much difference to how people vote.

  • rate this

    Comment number 16.

    RP - So are you saying a new boy with L plates can do the job better?

    All because of a personality clash.

    Bank should not never have been bailed out, should have been liquidated and sold off in parts. Then we would not have this problem now.

  • rate this

    Comment number 15.

    Hester and other rich bankers are just sophisticated thugs who rob others. But because they are sophisticated society seems to accept them.

  • rate this

    Comment number 14.

    He's left RBS because he's a useless waste of space who likes to spend taxpayers' money rewarding his chums for failure.

  • rate this

    Comment number 13.

    @9 - UBS was fined USD1.5Bn over LIBOR and GBP29.5Mn for rogue trader (just in the UK - other fines levied elsewhere) on top of the USD1.4Bn loss in the same incident. It's not loose change.

    If you have evidence for where the rules (laws or not) are being broken - you can take that to an authority - or share here, otherwise it's just the usual carping.

  • rate this

    Comment number 12.

    Hey muppets, get ready for for the old 'pump and dump', which worthless shares are your pension funds going to be buying?

  • rate this

    Comment number 11.

    This is a very good reason why we don't want banks, or any industry for that matter, under state control.

  • rate this

    Comment number 10.

    Hmmnn. Now this is from the Government via UKFI that says it doesn't want to hold shares in businesses because it doesn't want to run businesses and somehow we find

    it has been interfering and running the business.

    Don't call me cynical! ;-)

  • rate this

    Comment number 9.

    @ 4. EggsBenedict
    @3 - I think you'll find there are already laws against all these things.

    No, there are only 'rules, guidelines and regulations' all of which have been and still are being broken. Hence the loose change fines having no effect.

  • rate this

    Comment number 8.

    Why do I think were in the middle of an Oxbridge “sticky bun” fight?

    Make no mistake about it, Hester’s been pushed out (that’s the sack to you and me avoiding any litigation).

    Looks like the “cunning plan” to sell RBS to recover public money in 2014 is now doomed to be an even bigger failure.

  • rate this

    Comment number 7.

    @5 - No, I think the law applies, and there have been widespread news coverage of where the law has been applied, and punitive measures also applied. It's obviously fashionable to have your viewpoint (bash the bankers etc.), but it doesn't stand up to scrutiny. The problem, as with all laws, is the enforcement of them.

  • rate this

    Comment number 6.

    Why wouldn't you mind going (in no particular order):

    You don't get on with your current boss,
    Current salary is well below industry norms,
    Massive pay off,
    Reputation and CV hugely bolstered by turnaround,
    Plenty of better opportunities,
    6 mths pay whilst looking for new job.

    Best of all you don't have to get involved or get the CV tarnished by that potential minefield called privatisation.

  • rate this

    Comment number 5.


    @3 - I think you'll find there are already laws against all these things.

    your quite correct however Government have decided that applying the law is optional for the financial services sector.

  • rate this

    Comment number 4.

    @3 - I think you'll find there are already laws against all these things.

  • rate this

    Comment number 3.

    "allowing a successor nine months or so to run the bank and develop a strategy,"

    Would this strategy include product mis-selling, interest rate rigging, fraud, corruption, bribery, drug cartel money laundering etc...
    Business as usual then for whoever becomes the latest godfather to join the mob.
    Laws now!

  • rate this

    Comment number 2.

    As ever Mr Peston You are the Man. Mark Carney starts on 1 July. Would he not have had a say in this?

  • rate this

    Comment number 1.

    We are being asked to believe that Hester was pushed because it was thought he would quit.
    It seems that he didn't mind being pushed.


Page 10 of 10



Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.