Leading investors in Royal Bank of Scotland (RBS) have told Merrill Lynch, the group's adviser, that chief executive Sir Fred Goodwin has one year to save his job. However, rumours in Edinburgh suggest Sir Fred is fed up of recent criticisms and could leave within three months.
Merrill Lynch is understood to have canvassed RBS shareholders on Sir Fred's future after it announced its £12bn rights issue last month. The consensus is believed to be that Sir Fred should stay on to oversee the 18-month to two-year integration of ABN Amro, which RBS bought as part of a consortium for €76bn (£60bn) last year.
A fund manager with an interest in RBS said: "Yes, we've spoken to Merrill on this issue. At least for now, he's bought himself some time. But he should recognise that this isn't a long-term endorsement. RBS hasn't been managed well. The ABN Amro deal now looks very, very ill advised."
Another shareholder said there had been "a bit of chat around the time of the rights issue" on Sir Fred's future, and that he had told non-executive directors that the chief executive should "see through" the ABN deal. The source added: "We need to keep him for operational reasons – it's quite conceivable he could go in 12 months' time."
RBS eased its debt worries on Friday with the £3.6bn sale of Angel Trains to a fund run by Australian investment firm Babcock & Brown. However, the bank is also looking to sell its insurance business, which is likely to be more problematic, with valuations by the four remaining bidders – believed to be Zurich, Allstate, Travellers and Allianz – thought to be way short of the £6.5bn asking price. A source close to the bidding process said: "It looks likely RBS will be forced to hang on to the business."
Zurich is being advised by the American bank Citigroup.
q Bradford & Bingley shareholders will meet tomorrow to vote on its rights issue and the introduction of the strategic investor TPG, a US private equity house. The bank's chairman and acting chief executive, Rod Kent, is likely to see the rights issue waved through, but is still facing calls for his resignation.
Mr Kent told The Independent on Sunday last week: "I can understand fully why shareholders are angry. We want to explain to them why bringing in TPG was the best option."