The shock announcement that Stephen Hester is stepping down as boss of RBS (LON:RBS) means there are vacant positions at both of Britain’s state-owned banks.
Hester was charged with leading the restructuring of the bank after it was bailed out by the government, along with Lloyds Banking Group (LON:LLOY), at the height of the financial crisis in 2008.
Hester’s claim that he would have liked to stay to see RBS through privatisation suggests he was nudged somewhat out the door.
“It has been nearly five years since I joined RBS after the bank was rescued by the Government,” Hester said.
“In that time we have reduced the bank's balance sheet by nearly a trillion pounds, repaid hundreds of billions of taxpayer support, and removed the imminent threat that this bank's size and complexity posed to the UK economy. All the while we supported 30 million customers every day to help them manage their finances.
“We are now in a position where the Government can begin to prepare for privatising RBS,” he added.
Praised rained down from the City for his part in saving the bank from “near death” as Shore Capital phrased it.
The broker downgraded the shares to ‘sell’ over the uncertainty about the road ahead.
RBS now needs to find a chief executive, while Lloyds will be on the lookout for a new chairman as Sir Win Bischoff hangs up his hat to enjoy retirement.
The question is who will take over?
Paul Tucker’s departure as Deputy Governor of the Bank of England fuelled speculation that he could take the reins at one of the banks.
The RBS job is not available until December though, while the Lloyds chair will be occupied by Bischoff until May 2014.
This, coupled with reports that Tucker is headed for a stint in academia in the US, suggests he may not be setting up shop at either RBS or Lloyds any time soon.
Most analysts are expecting comments from George Osborne at next week’s Mansion House speech to reveal the government’s plan for its stakes in RBS and Lloyds.
Joseph Dickerson from Jefferies thinks a sale would offer investors a buying opportunity.
Not only would sales return them to “normal” investment propositions, but they would give the commercial freedom to potentially grow from, for example, increasing lending.
The story of the two bailed-out lenders dominated another week of choppy trading that saw the Footsie fall further.
Sinking to the foot of the table was Severn Trent (LON:SVT) as the water company saw suitor LongRiver walk away after three failed bids. The shares have slumped to £17.60, which is almost £5 below the consortium’s offer of £22 a share.
M&A activity failed to spur the FTSE 100 forward as mobile phone giant Vodafone (LON:VOD) shares dialled down after it made an approach for Kabel Deutschland.
The company is weighing up raising its initial £6.1bn offer for Germany’s biggest cable operator.
Centrica’s (LON:CNA) farm-in deal with privately-owned fracker Cuadrilla allowed the City to write another chapter on the UK shale gas story on Friday.
The British Gas owner is paying up to £100mln and a further £60mln if the Bowland shale play moves into development.
Investec called Centrica’s move a sensible one.
The broker said: “In essence, Centrica is acquiring an option for a low outlay to participate in any growth in the UK shale industry. This makes sense in terms of its stated business strategy and overall UK energy policy.”