Politics, not banking, behind Hester resignation

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It seems this morning increasingly likely that politics, not banking, was behind Stephen Hester's "decision" yesterday to step down as chief executive of RBS. Which of course should come as no great surprise given the government (or the taxpayers) own more than 80% of this huge bank.

Stephen Hester
Stephen Hester is stepping down as boss of RBS Credit: John Stillwell/PA Wire/Press Association Images

A Whitehall source has told me that both the Business Secretary, Vince Cable, and the Chancellor, George Osborne, were on the same page when it came to the need for a change of management at RBS. Both felt the largely state-owned bank needed fresh blood at the top.

I'm told it had got to a point where the two Cabinet ministers concluded that Hester wasn't the right man to see the bank out of its current situation and he was no longer able to achieve what he was being asked to do. Osborne and Cable had phone calls about this but they didn't meet.

Vince Cable and George Osborne
Vince Cable and George Osborne are "on the same page" Credit: Stefan Rousseau/PA Archive/Press Association Images

I understand the Government, through Osborne and Cable, had decided Hester was too attached to the old ways of running things and to a banking regime which had led to all the problems. It was therefore decided that it would difficult for Hester to be the agent of change the Government wanted him to be.

RBS could be privatised this year.
Stormy times at RBS Credit: Johnny Green/PA Wire/Press Association Images

In the other, previously problematic, banks the ministers considered the reforms were happening more speedily and the chief executives were pushing through changes more satisfactorily than at RBS. We're not talking about a crunch moment here, no overt campaign to push him out the door but the political pressure was reaching a climax in terms of Hester's ability to do the job. As it was put to me, "the planets were aligning" and Hester had to go.

Read: 2000 RBS job cuts expected