June 13 - Royal Bank of Scotland shares fell by as much as seven percent on Thursday morning, following the surprise ousting of CEO Stephen Hester. The bank is also cutting around 2000 jobs as it continues to restructure its investment bank. Joanna Partridge reports investors are now left questioning who will lead to the bank towards the sale of the government's stake.
Looking for a new boss - and cutting more jobs. Large changes are underway at Britain's part-nationalised Royal Bank of Scotland. Chief Executive Stephen Hester will leave by the end of the year. He's being sent on his way after five years in charge - with a £1.6 million goodbye and up to £4 million in shares. He previously said he'd like to stay on to oversee the start of the sale of the government's 81% stake - expected to happen before the next election in 2015. SOUNDBITE: Stephen Hester, Outgoing Chief Executive of RBS, saying (English): "Of course I'd have liked to have stayed because I feel that I've been in the trenches with all of my people helping RBS to recover and privatisation would have been a fitting end to those endeavours. But on the other hand it has been a very bruising and difficult job, and so I certainly don't have to be prised away reluctantly." Hester is credited with turning RBS around and steering it back to profit in the first quarter this year, despite traders' involvement in the Libor rate-rigging scandal. But the bank's board believe a new CEO could prepare for privatisation and lead the bank afterwards. Britain's Treasury is also thought to have played a role. SOUNDBITE: George Osborne, British Finance Minister, saying (English): "Stephen Hester has done a very good rescue job and now we're moving from that rescue phase to a new phase where we focus on the British economy and we focus on getting the British taxpayers' money back." With no successor, Hester's departure caused the share price to fall by as much as 7% - further away from the level the government wants to get for its stake. Bookmaker Paddy Power has the group's Finance Director Bruce van Saun as the early favourite to take over, followed by HSBC Chief Executive Stuart Gulliver and Lloyd's Group Finance Director George Culmer. Dominic Elliott from Reuters Breaking Views says government interference makes the job tough. SOUNDBITE: Dominic Elliott, Reuters Breaking Views, saying (English): "Osborne and the Treasury are saying look, we've had enough, we want to manage RBS as we want to do it, and that's the problem for RBS management, they can't really on the one hand come up with a very coherent strategy, which is what they've done, and then see it through, because a lot of the time they get hijacked." In the meantime, restructuring continues. Up to 2000 jobs are to go at RBS' investment bank. Continuing the bank's turnaround and keeping the government happy won't be an easy job for anyone