Financial News

  • 25 February 2014, 23:12

Names Emerge For RBS Job As Revamp Looms

A former boss of the insurer Standard Life and an ex-KPMG executive are emerging as early contenders to become the next chairman of Royal Bank of Scotland (RBS).

Sky News understands that Sir SandyCrombie and Brendan Nelson, who sit on the taxpayer-backed lender's board as non-executive directors, are being discussed as possible successors to Sir Philip Hampton.

The post, which Sir Philip is likely to vacate by the bank's annual meeting in 2015, will be a crucial one as RBS's chief executive, Ross McEwan, tries to implement the new strategy that he will unveil later this week.

A senior RBS source said that some members of the board were keen for Sir Sandy, who has been a director since 2009, to put himself forward for the role once a formal process gets underway.

That would contravene best practice in the City, since the senior independent director is by convention the board member who organises the search for a new chairman.

The most significant clue as to whether he wishes to be considered for the role will therefore be whether Sir Sandy steps aside and allows the search to be led by a boardroom colleague.

An insider said that Sir Philip's departure was unlikely to be announced until RBS had identified his replacement.

Sir Sandy, who stepped down from running Standard Life in 2009, is also a former director of the Association of British Insurers, which exerts significant influence over corporate governance issues in UK boardrooms.

Mr Nelson also serves on the board of BP, the oil major, having retired from KPMG in 2010.

RBS's unique status as a ward of the state means that UK Financial Investments (UKFI), which manages taxpayers' 81% stake in RBS, and the Treasury will play an active role in identifying the next chairman.

Sir Philip, who took over in 2009, said last summer that periods of between five and seven years were a natural tenure for chairman and chief executives.

Sir Philip led the recruitment of Mr McEwan as Stephen Hester's successor last year.

On Thursday, the new chief executive will outline a new strategy which will involve further shrinking its investment bank and substantial cost cuts, as well as an estimated 8bn annual loss for 2013.

Sky News revealed last week that RBS is preparing to shed tens of thousands of jobs from its workforce of 120,000 by selling or closing a number of its divisions.

These will include the withdrawal from dozens of the 38 countries in which it still has a presence.

The reductions will include 18,500 staff employed by Citizens, the US retail bank which RBS has already announced that it will offload through a stock market listing.

Another 4,500 jobs will be transferred as part of the sale of more than 300 branches to a consortium which includes the Church of England's pension fund.

Mr McEwan plans to emphasise his focus on serving customers through greater automation of banking services, which will also mean thousands of jobs going over time.

In addition, central functions at RBS will also face job cuts similar to those implemented by Mr McEwan while he was running its retail bank.

The revised RBS strategy will cement the final retrenchment from the empire-building of Fred Goodwin, its former chief executive, and create a significantly more modest operation than the one envisaged by Mr Hester.

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