Cameron urges RBS to speed up reforms

The bank must now complete its restructuring.

New Statesman
Photograph: Getty Images.

David Cameron has urged the Royal Bank of Scotland (RBS) chief executive Stephen Hester to speed up its reforms as Britain is mulling to offer most of the bank’s shares to the public.

The reforms include the rundown of non-core assets and paring back of its investment banking arm.

Speaking on a three-day visit to India, the British Prime Minister said he was not satisfied with the pace of rebuilding and restructuring the bank.

Cameron said: “The first job is to turn around the performance of RBS and to strengthen its balance sheet, strengthen its business and that’s what Stephen Hester is doing. But I am keen to examine all possibilities for what we can do to put RBS, in time, back into the private sector.

“It’s a huge undertaking, it was a very badly damaged institution, but I think they are doing the right thing ... obviously we want them to, where possible, accelerate the adjustments that they are making in terms of making it a strong organisation.”

The bank’s senior executives, however, said that significant progress had been made in the restructuring plan launched by Hester in 2009.

The Treasury refused the prospect of offering free shares to the public as part of reprivatising RBS in 2011. When the idea was revived by Vince Cable this month, his team said to consider it along with other options for the stake’s disposal.

Moreover, the National Audit Office will not approve the idea of offering shares to voters as a pre-election bribe.

“We’ve got to get the Royal Bank of Scotland to a point where it is worth what the taxpayer paid. Then we can have a big national discussion about what to do with the shares and how to return it to the private sector,” George Osborne told Sky News at a G20 meeting in Moscow.

Sajid Javid, Treasury minister responsible for RBS, told the Financial Times that the idea had been put forward by the Liberal Democrats. Asked whether he was attracted to the idea in principle, he said: “No.” “Our focus remains on selling the shares at the best price at the right time.”

Britain’s £45bn rescue of RBS was one of the largest bank bailouts of the financial crisis.