Stephen Hester admits he "considered resigning"
Wednesday, 08 February 2012 09:28
The banker at the centre of last week’s row over bonuses, Stephen Hester admits that he briefly considered resigning from his position as chief executive of the Royal Bank of Scotland (RBS).
Mr Hester said that last week when he and his bankwere at the centre of the political row over bonuses, he had experienced some "deeply depressing" moments but he vowed “to prove the critics wrong.”
He spoke of the challenges faced when he took on the position. "I had to replace the whole senior management team at RBS. Not just people to run the bank well, but to diffuse the biggest time bomb in history in terms of bank balance sheets."
Mr Hester's initial comments came in a memp to staff where he defended the progress RBS has made over the past three years in dealing with its problems.
An extract from the memo said: "RBS is still in its loss making phase The losses ironically are a measure of our recovery success. Over the last 3 years we have generated over £33 billion of pre-impairment profits from improving our Core businesses in the face of many challenges. This has allowed us to afford to take the costs of "clean up" from our risky inheritance, in loan losses, disposal costs and restructuring charges (£38 billion so far)(1). We are ahead of schedule in that clean-up; RBS is a much safer company as a result."
Mr Hester is the chief executive of the Royal bank of Scotland and was brought in by the government to return the bank to profit and create a new strategy for the bank that had to be bailed out at the height of the financial crisis by £45 billion of taxpayers’ money.
Last week politicians of all sides rallied around public opinion to influence Mr Hester’s decision to turn down the share bonus he was expected to be offered which was worth £963,000 at last week’s share price.
In a memo to staff Mr Hester said: "While it has been personalised in different ways, whether on myself or my predecessor, many have felt a broader impact on RBS of the uncertainty and criticism.
"We can't control the outside world - whether the economic environment or the political one. That's not unique to us. But if ever something has been proven over our last 3 years of history, it's this - we can successfully overcome great obstacles.
"There is no doubt that our position in the spotlight makes the job harder. And we can't know how much damage that will do to RBS or the interests of those we serve, whether as customers or shareholders. But the best way to deal with it is to prove the critics wrong."
Mr Hester admitted that bankers had been overpaid in the past. He said: "One of things that happens when you have a long period of expansion is that you can get over-confidence.
"In the case of the banking industry I think there was both over-confidence and with the benefit of hindsight over-rewards."
The Group Chairman of RBS, Sir Philip Hampton also said that he would not accept a bonus for 2011. He was due to receive a bonus worth £1.4 million.
Last week Mr Hester’s predecessor, Fred Goodwin was stripped off his knighthood. RBS is 83 per cent owned by the UK taxpayer.
Mr Hester’s comments seem to indicate that he is determined to successfully see through the job of changing RBS, returning it to profit and raising the share price so that it can eventually be sold and the taxpayer stake repaid.
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