Royal Bank of Scotland CEO Stephen Hester to stand down
Stephen Hester is to step down as chief executive of Royal Bank of Scotland in December after five years in the role.
RBS chairman Sir Philip Hampton said the transition was necessary if RBS was to return to private ownership by the end of 2014, as the Treasury hopes.
Mr Hester will receive 12 months' pay and benefits worth £1.6m and the potential for £4m in shares.
The search for his successor at the helm of the part-privatised bank will start immediately.
In a statement RBS said an "orderly succession" would allow the new CEO to oversee the re-privatisation of the bank, and lead it "in the years that follow".
It said Mr Hester "was unable to make that open-ended commitment".
Speaking to reporters on a conference call, chairman Sir Philip said the timetable, pushed by the Treasury, for the bank's return to the private sector had forced the transition.
He said a new chief executive would need to be in place by early next year if the bank was to begin its return to private ownership at the end of 2014.
He admitted the Treasury, which owns an 81% stake in the bank, had played a part in the decision.
"The acceleration of considering succession for a CEO role arises largely from the Treasury's determination... where it can be returned to the private sector by the end of 2014," he said.
The BBC's business editor Robert Peston said Mr Hester's departure was described by a Treasury official as by "mutual agreement".
'Bruising and difficult'
Mr Hester led the large-scale restructuring of RBS following its near collapse in 2008 at the height of the financial crisis.
In a video statement released by RBS, Mr Hester expressed mixed feelings about his departure.
"Of course I'd like to have stayed as I feel I've been in the trenches with all of my people helping RBS to recover, and privatisation would have been a fitting end to those endeavours," he said.
"But it has been a very bruising and difficult job so I certainly don't have to be prised away reluctantly."
In an interview with the BBC later, he said he was "content with the board's perspective" that a new chief executive was needed to see RBS into privatisation.
"We've gone from bust bank to normal bank, and I hope the next chapter is to go from normal bank to really good bank," he said.
RBS said it had made "huge progress" under Mr Hester, becoming "a strong bank, with balance sheet and funding transformed and the business fundamentally reshaped".
"[We are] now beginning to prepare for possible share sales by the UK government," it said.
Chancellor George Osborne praised Mr Hester's work, saying: "Stephen Hester has made an important contribution to Britain's recovery from the financial crisis.
"Having brought RBS back from the brink, now is the time to move on from the rescue phase to focus on RBS being a UK bank that provides greater support to the British economy."
Last month RBS said it would be ready to return to the private sector next year and expected the government to start selling shares from the middle of 2014.
The government still owns an 81% stake in the bank after it invested tens of billions of pounds to rescue it from collapse in 2008.
In February, RBS announced its fifth straight annual loss since being taken over by the government, but made a profit in the first three months of this year.
Mr Hester said he was confident the restructuring of RBS was now largely complete, and that the eventual sale of the government's stake should allow £45bn of bailout money still owed to taxpayers to be paid back.