[ by Howard Haykin ]

I was disappointed to learn that Stephen Hester will step down as Chief Executive of Royal Bank of Scotland.  Not everyone shares that opinion.

The RBS Board of Directors decided to jettison its Chief Executive - 'time to move on, according to the Chair.  Banking  support the decision, believing the move will make it easier to sell RBS shares - i.e., with new management fronting the organization during the roadshow. 

At one point, I too was a Hester critic - and criticized the audacity that he should receive any sort of bonus - he was awarded a modest one for F/Y 2011 - when the bank was losing money and its shares were underperforming.  The public was ruthless.  Shortly thereafter, Stephen Hester renounced the bonus - even though he was being paid way less than what non-productive U.S. bank CEOs were getting at the time.  Hester simply accepted his fate.  "His day would come."

Mr. Hester also scored by promoting accountability throughout RBS, and he communicated these expectations to all RBS personnel.  These standards were sorely needed, because the bank had been trashed by ex-Sir Fred Goodwin - following his miscalculated and mistimed acquisition of Dutch financial giant, ABN Amro. 

Besides promoting top-down integrity and character at the bank, Mr. Hester successfully downsized the bloated institution of hundreds of billions in assets, stripping it down to its core.  Unfortunately, the reputations of both Mr. Hester and Royal Bank of Scotland took a royal hit with the bank's $612 million settlement of Libor manipulation charges. 

Yet, believe it or not, Mr. Hester came out smelling like roses.  That's because he chose to "bite the bullet" and pay the penalties - and was accountable and moved on with the all-important rebuilding process.  

This foresight distanced Hester from other bank chieftains who, to this day, still refuse to face the facts and somehow believe that time will absolve their banks and personnel of any wrongdoing in the Libor scandal.

Maybe I'm wrong, or missing key facts, but I am convinced Hester deserves better and anticipate he will get that opportunity.  And, BTW, Mr. Hester - this time, keep the $8.8 million severance package.  You've earned it.

I am Howard Haykin and I publish www.Compliance-Insights.com.  I welcome differing and like-minded opinions.