George Osborne and Stephen Hester: A giddy game of musical chairs in the City

 

Share
Related Topics

The City hasn't seen this sort of blood-letting or excitement for years, possibly decades. First of all came George Osborne's stunning decision to overlook all the City grandees and appoint Don Draper, sorry Mark Carney, to be the new Governor of the Bank of England, thus over-turning centuries of tradition and ignoring months of lickspittle by wannabe governors.

Now the Chancellor has trumped the City again with his brutal sacking of one of their own, the former investment banker, Stephen Hester, as chief executive of Royal Bank of Scotland. Treasury officials are still claiming that Hester's departure was decided by the RBS board because they wanted someone who would stay long enough to oversee the complex privatisation.

But no one believes them. Indeed, it's now becoming clear that Osborne and Hester have not been getting on for months – disagreeing on a number of the outstanding issues surrounding RBS. By far the biggest rift, though, is over whether RBS is lending enough to small business owners and the real economy. Hester says he is; Osborne, egged on by Vince Cable, the Business Secretary, doesn't think so.

With one eye on the next general election, Osborne knows he must get lending moving again, and only a new leader at RBS can do that. He may have got more new blood than he bargained for – the RBS chairman, Sir Philip Hampton, may be off too – so that leaves two vacancies to fill.

Will new faces make a difference? And who could they be? If Osborne's choice of Carney to inject fresh thinking at the Old Lady is anything to go by, he will have some novel ideas on candidates although of course it's for RBS to decide. And yes, choosing the right leader is critical at such a tricky stage in our economic revival, as it's the RBS boss who sets the right tone with the public, but also, crucially, with the staff.

So Hester's replacement is likely to be a retail banker with small business credentials – just as Barclays chose Antony Jenkins, a retail a;nd business banker, after Bob Diamond quit. One safe bet would be Chris Sullivan who runs RBS's corporate business.

There's another vacancy that flows from Osborne's selection of the Canadian hockey-playing banker. That's to replace Paul Tucker, the Deputy Governor, who resigned on Friday and who had been the City's favourite man to replace Sir Mervyn King.

With Carney due to take over from Sir Mervyn in two weeks' time, Tucker's departure was no surprise either. But his leaving means there are now two deputy positions open at the Bank of England for Carney to fill – even more new faces.

What a web the Chancellor has been weaving. If his coup shakes up lending to the UK's 4.7 million small business owners – RBS has nearly half of the market – then Hester's head will have been a worthwhile sacrifice. Time to change Osborne's nickname from submarine to Spiderman.

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

 

General Election 2015: The SNP and an SMC (Salmond-Murdoch Conspiracy)

Matthew Norman
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk