RBS announced Hester (pictured) would step down in June this year. However, speculation about the circumstances around his departure has continued.
UKFI chairman Robin Budenberg told the Treasury Select Committee: “Our view was it made sense to have a new chief executive in place before RBS returned fully to the private sector. Given that, our view was it was better to make that change sooner rather than later.”
Asked whether UKFI spoke to the Chancellor or Treasury ministers about Hester, Budenberg responded: “We did. But I would say we spoke first to the RBS board, to the chairman and senior independent director of the board.”
The RBS board was already “mulling over” replacing Hester, he said. However, he acknowledged UKFI’s view may have had an impact on the decision to let Hester go: “I think it was certainly important in terms of acceleration, yes.”
The final decision to force Hester to step down was taken by the RBS board, he stressed.
After the financial crisis of 2008, UKFI was tasked by the government to protect and create value through managing the public’s stake in the bailed-out banks. It has previously been described by MPs as a “fig leaf” for government intervention in the day-to-day running of RBS.
In June 2013, RBS announced Hester would step down as chief executive due to his inability to make an open-ended commitment to the position.
However, it has since been suggested by political journalist Iain Martin that the Treasury was keen to arrange the departure in order to avoid a higher pay-out.
