RBS to seek outsider for Mathewson replacement

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The Independent Online

Royal Bank of Scotland intends to seek a strong external chairman who can act as a counterweight to its strong-willed chief executive, Sir Fred Goodwin, as a replacement to Sir George Mathewson when he retires.

Royal Bank of Scotland intends to seek a strong external chairman who can act as a counterweight to its strong-willed chief executive, Sir Fred Goodwin, as a replacement to Sir George Mathewson when he retires.

The debate in the boardroom over who might succeed Sir George comes as RBS is preparing to withdraw a libel action it launched against The Sunday Times over diary articles claiming Sir Fred behaved in a grandiose way, including trying to use his position to gain membership of Scotland's exclusive Bruntsfield golf club.

RBS and The Sunday Times have entered settlement talks about the high-profile dispute in order to avoid a courtroom battle. Richard Caseby, the managing editor of The Sunday Times, said the newspaper had "absolutely no comment" on the situation. RBS would also not comment.

City sources said RBS's plan to find a replacement for Sir George, who is 65 next year, has been given added impetus by the acrimonious row between Sir Fred and The Sunday Times. "No doubt this has been a catalyst for a board rethink," one observer said.

Some senior RBS insiders are said to be concerned that despite the fact the writ was issued in the name of the bank as well as Sir Fred, there was insufficient consultation with the board and senior executives on whether to take legal action against a national newspaper.

RBS has been transformed into one of the world's biggest financial powerhouses in the past five years. Analysts credit its remarkable growth both to Sir George, who completed the transformational deal to acquire NatWest in March 2000 for £21bn, and to Sir Fred, who stepped into the top job from deputy chief executive and has overseen a strategy of rapid expansion, including in North America.

While the duo has been widely praised in the City, relations with unions representing RBS employees have become increasingly strained.

There is also an increasing view in the banking community that Sir Fred has gained an inappropriate amount of control over RBS's board. Sources said that several senior figures at RBS are keen to use Sir George's retirement as an opportunity to find someone who would be prepared to stand up to Sir Fred. That person would probably have Scottish roots, seen as a necessary requirement for the figurehead of Scotland's biggest company, but also considerable experience in the wider business world.

Under the Listing Rules, Sir George does not have to retire until he is 70, though he may step down before then. The bank has made no public statement about its succession plans and yesterday a spokesperson said it was "untrue" the company was actively looking for a new chairman.

There will be a number of other changes to the board in the short term, with Sir Angus Grossart and Sir Iain Vallance due to step down as non-executive directors in April. Both executives are not considered to be independent under the revised Combined Code because they have served for more than a decade.

Sir Angus has been a director of RBS for nearly 20 years and is one of the mainstays of the Scottish banking world.

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