Hester's successor: the runners and riders emerge

With seven figure salary, job hardly a "thankless task".

A successful sell off the State’s shareholding in Royal Bank of Scotland (RBS) seems further away than ever. The RBS share price continues to tank. RBS shares kicked off the year at around 366p each; today they are down to 288p, down 23 per cent for the year to date, the worst performing UK banking share. Take a bow Mr. Osborne.

Since his latest RBS comments at the Mansion House speech on 19 June, the share price has fallen by more than 30p. The kindest interpretation of the Chancellor’s intervention in the past 10 days relating to the future of RBS is that he has created fresh political confusion. Encouraging the RBS board to dispense with Stephen Hester prematurely did little in the short term for the RBS share price.

Just to really put the boot in, Osborne then performed a U-turn of stunning proportions by saying that he would examine a good bank/bad bank split at RBS. This proposal was one that Osborne had argued against consistently despite strong arguments in its favour from such distinguished advocates as Mervyn King and Lord (Nigel) Lawson. If such an argument had merits – and it had three year ago – that time has passed.

A period of silence from Mr. Osborne concerning RBS would be welcome for the foreseeable. Meantime, keep a close eye on possible obfuscation relating to the share price that the government requires to obtain to break even on its RBS share acquisition. The UK government currently holds 81.14 per cent of shares in RBS, having injected £45.5bn. The average government buy-in price was 502.26p.

According to RBS, the break-even price has dropped to 440.6p, taking into account fees that RBS has paid to the government. This does not however take inflation into account. A more accurate breakeven figure would be somewhere about 470p but the RBS website continues to promote the notion of 440p as the magic figure.

One thing that the Chancellor could do by way of damage limitation would be to encourage an acceleration of the process to appoint Stephen Hester’s successor. The RBS board does not have to look too far for the standout candidate. The bank has reportedly engaged the doyen of City headhunters, Anna Mann, co-founder of blue-chip consultancy MWM, to recruit Hester’s replacement. MWM certainly has form: it has recruited 16 of the current CEOs of the present FTSE 100. Ignore the guff in the press about the CEO of RBS being a thankless task.

The job carries a seven figure salary, generous bonuses and guaranteed recognition in a future Honours List for successful execution. The latest odds, courtesy of Ladbrokes, suggest that Chris Sullivan, RBS chief executive of corporate banking, is the favourite at 9/4. Nathan Bostock, RBS’ head of restructuring and risk and the early front-runner – Ladbrokes quoted him as short as 1/2 last week – has drifted like a barge out to 3/1. National Australia Bank Group CEO Cameron Clyne has attracted support and has been backed into 4-1 from an initial show of 6-1. As Investec analyst Ian Gordon argues today in a note to clients, Ross McEwan, CEO, UK Retail at RBS is a stand-out choice. This time last week, his odds were a generous 20-1. This morning, his odds have tumbled to 8-1.

Last Wednesday, just ahead of George Osborne’s Mansion House speech, I asked a group of senior bankers attending a meeting of The Digital Banking Club I was chairing, to name what they reckoned was the world’s leading retail bank. There was strong support for Royal Bank of Canada – a view with which I concurred by the by. Interestingly, the CEO of Royal Bank of Canada, Gordon Nixon, is quoted at 16/1 to succeed Hester.

But the retail bank currently most admired in my straw poll last week was Commonwealth Bank of Australia. Much of the credit for CBA’s current success can be attributed to the work of Ross McEwan. McEwan joined RBS in August last year from CBA where he was Group Executive for Retail Banking Services for 5 years.

If Osborne has to interfere again in the running of RBS – on balance it would be better if he did not – he could do worse than give a nudge to the RBS chairman and to his expensively engaged headhunter – to view McEwan as a worthy successor to Hester.

Hester ousted: who's next? Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

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Jeremy Corbyn will stay on the Labour leadership ballot paper, judge rules

Labour donor Michael Foster had challenged the decision at the High Court.

The High Court has ruled that Jeremy Corbyn should be allowed to automatically run again for Labour leader after the decision of the party's National Executive Committee was challenged. 

Corbyn declared it a "waste of time" and an attempt to overturn the right of Labour members to choose their leader.

The decision ends the hope of some anti-Corbyn Labour members that he could be excluded from the contest altogether.

The legal challenge had been brought by Michael Foster, a Labour donor and former parliamentary candidate, who maintained he was simply seeking the views of experts.

But when the experts spoke, it was in Corbyn's favour. 

The ruling said: "Accordingly, the Judge accepted that the decision of the NEC was correct and that Mr Corbyn was entitled to be a candidate in the forthcoming election without the need for nominations."

This judgement was "wholly unaffected by political considerations", it added. 

Corbyn said: "I welcome the decision by the High Court to respect the democracy of the Labour Party.

"This has been a waste of time and resources when our party should be focused on holding the government to account.

"There should have been no question of the right of half a million Labour party members to choose their own leader being overturned. If anything, the aim should be to expand the number of voters in this election. I hope all candidates and supporters will reject any attempt to prolong this process, and that we can now proceed with the election in a comradely and respectful manner."

Iain McNicol, general secretary of the Labour Party, said: “We are delighted that the Court has upheld the authority and decision of the National Executive Committee of the Labour Party. 

“We will continue with the leadership election as agreed by the NEC."

If Corbyn had been excluded, he would have had to seek the nomination of 51 MPs, which would have been difficult since just 40 voted against the no confidence motion in him. He would therefore have been effectively excluded from running. 

Owen Smith, the candidate backed by rebel MPs, told the BBC earlier he believed Corbyn should stay on the ballot paper. 

He said after the judgement: “I’m pleased the court has done the right thing and ruled that Jeremy should be on the ballot. This now puts to bed any questions about the process, so we can get on with discussing the issues that really matter."

The news was greeted with celebration by Corbyn supporters.