RBS appoints heavyweight bankers to appease critics

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The Independent Online

Royal Bank of Scotland's appointment of three banking heavyweights to its non-executive board looks to have appeased critics angered by the bank's losses this year. Some analysts have warned, however, that it is only one step in the right direction.

The UK bank yesterday confirmed the appointment of Stephen Hester, John McFarlane and Arthur Ryan as non-executive directors, starting at the beginning of October, and the bank was keen to stress their financial credentials yesterday.

RBS's chairman Sir Tom McKillop said: "Their experience in financial services will be of great benefit to RBS given the increasingly diversified and international nature of our powerful banking franchises."

Investors welcomed the move. Guy Jubb, head of corporate governance at Standard Life Investments, which holds 3.5 per cent of the stock, said: "These changes... demonstrate that the RBS board is getting to grips with its governance."

Simon Maughan, analyst at MF Global, added: "This is a positive step; RBS has been under pressure from the market to do this."

Mr Hester, chief executive of British Land, has experience in both retail and investment banking. He was at Credit Suisse for 19 years, where he became chief financial officer at 35, before joining Abbey National as finance director.

Mr Hester, who became non-executive deputy chairman of Northern Rock in February, is a well-respected name in the UK financial services sector. He will give up his position at Northern Rock when he joins RBS.

John McFarlane worked at Citigroup in a number of senior roles including head of UK for 18 years before becoming group executive director for Standard Chartered. Latterly, he spent 10 years as chief executive of Australia and New Zealand Banking Group.

Art Ryan, spent 14 years in charge of Prudential Financial, stepping down in the past year. He also worked for 22 years at Chase Manhattan Bank where his roles included president, chief operating officer and vice-chairman.

Mr Maughan said: "The appointments are only a net positive. It is a step in the right direction, but until someone stands up to Sir Fred there will be no radical shake up at the bank."

The move was sparked by shareholders furious at the group's first-half loss of £691m, who demanded it bolster its banking expertise on the board. The financial situation had forced the bank to turn to investors for a £12bn rights issue in April, while the group is also attempting to sell assets to boost capital, including its insurance arm. Analysts at Cazenove added: "We... do not regard these appointments as material for the share price. It is more important that the group meets its £4bn target from disposals though recent comments from management have raised doubt that it will."

RBS also added in its statement that current non-executives Lawrence Fish and Charles Koch will retire ahead of the group's annual general meeting next April.