Nick Goodway: In the City there is widespread support for Hester – the worst-paid bank boss in the UK

It is likely RBS failed to meet the targets set for lending to small and medium-sized business under the Government's Project Merlin

One school of thought believes Stephen Hester is a civil servant, because he runs an institution which is 82 per cent owned by the taxpayer. That same school believes he should be paid at senior civil service rates and not receive huge bonuses. Some even think a civil servant should have got the job.

That was always unlikely. The Financial Services Authority has to approve every senior banking appointment. It was never likely to give the go-ahead for the Permanent Secretary in the Office of Paperclips and Staplers to run RBS.

Mr Hester, 51, had the full banking pedigree when he was appointed in November 2008. He joined the London arm of Swiss investment bank Credit Suisse after graduating from Oxford and became its youngest ever managing director, aged 35.

Ten years ago he left to become finance director of Abbey National. He was key to a major turnaround of that business and its sale for £8bn to Spain's Banco Santander.

Colleagues said he was brilliant at simplifying complex issues and very clear on choosing the right strategic moves. That track record put him at the top of Gordon Brown and Alistair Darling's shopping list when they were looking for a replacement for Sir Fred Goodwin after the Government's £45bn bailout of RBS.

Mr Hester is now just over half-way through the five-year strategic plan he outlined for RBS in 2009. By his own admission he has hit many of his targets but missed others. He has moved the bank from making the UK's biggest-ever corporate loss of £24.1bn to a modest profit of £1.2bn in the first nine months of 2011. He has sold huge chunks of the bank, including the 318 branches which the EU required under state aid rules, and next year will sell the insurance business, which includes Direct Line and Columbus.

Those are the headline deals, but RBS has actually got rid of £600bn of non-core assets since 2008 – much of that dodgy financial instruments or bad property loans. He has also boosted the amount of spare capital in the bank. That is the money it could draw on in any future crisis rather than having to be bailed out.

Under Mr Hester, RBS has cut around 30,000 jobs, cutting costs by tens of millions. He now has to wind down the bank's investment banking arm, which will remove more risk and cost more jobs.

Critics point to the fall in the RBS share price – down 40 per cent in 2011 – and the fact the taxpayer stake is now worth only half the amount of money we injected.

It is also likely RBS failed to meet the targets set for lending to small and medium-sized business under the Government's Project Merlin last year. The bank will argue that it is hard to lend to businesses which do not want to borrow.

In the City there is widespread support for Mr Hester and not a little sympathy. After all he will certainly be the worst-paid UK bank boss this year. There will be even more support if he can get the share price up from its current 27p to the 50p which is the average the Government paid for its stake.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones