City backs RBS board changes

Royal Bank of Scotland said yesterday the Ayrshire-born Sir Tom McKillop will replace George Mathewson as chairman of the bank, and Guy Whittaker, the treasurer of Citigroup, will become its finance director.

Sir Tom's elevation from deputy chairman was widely expected, and will take effect from April. He leaves the troubled drug maker AstraZeneca, where he is chief executive, at the end of this year. Sir Tom is also a non-executive director of the oil giant BP.

The appointment of Mr Whittaker was welcomed by the City as something of a departure for the Edinburgh-based bank. Institutional investors made it clear to RBS that they did not want the list of potential candidates confined to Scots. It is hoped that as an external appointment and a non-Scot, Mr Whittaker will be better placed to bring a strong, fresh voice to the RBS board. His predecessor, Fred Watt, who announced in June that he was leaving to spend more time with his family, was seen by some in the City as too subservient to Sir Fred Goodwin, the chief executive.

RBS, the UK's No 2 bank, suffers one of the lowest ratings of any European bank. The thunderous applause that greeted its transformational acquisition of a flabby National Westminster Bank in 2000 has long since turned to a slow handclap amid deep misgivings over RBS's spending spree, notably in the US.

Its lowly share price has little to do with performance and more with worries that RBS may make more acquisitions, despite repeated assurances from Sir Fred that none are on the cards.

Shareholders are looking for a firm commitment from the bank to return funds, probably through a share buy-back programme.

Ian Gordon, at Dresdner Kleinwort Wasserstein, said: "Guy Whittaker's appointment is good news."