THE GOVERNMENT’S faltering attempts to sell its stakes in nationalised banks suffered another blow yesterday when the chairman of the agency responsible for the stakes resigned with a gloomy parting shot at the state of the financial markets.
UK Financial Investments said Sir David Cooksey is retiring, with current chief executive Robin Budenberg moving upstairs to replace him. Jim O’Neil, who has been responsible for the Treasury’s stakes in Lloyds and Royal Bank of Scotland, has been named as the new chief executive.
Cooksey admitted his two and a half years at UKFI, which included the cut-price sale of the “good” part of Northern Rock to Virgin Money, had been “extremely challenging” and warned that market turmoil means further divestments will not happen quickly.
“Disposal of the investments in Lloyds and RBS will inevitably take longer than originally expected, given the challenging economic and banking industry environments both in the UK and globally,” he said.
The government is sitting on a £25.6bn loss on its 83 per cent stake in RBS and a £12.5bn loss on its 41 per cent holding in Lloyds, so needs shares in both banks to more than double to reach the break-even point.
The reshuffle takes UKFI to its third chief executive and fourth chairman since it was set up in November 2008.
O’Neil will take over in April with Budenberg acting as executive chairman until that point.
Several FTSE-listed firms have been criticised for promoting their chief executive to the position of chairman, which is seen as against best corporate governance practice because of a perception of a lack of independence. UKFI sources insisted, however, that Budenberg would not be a patsy because he is able draw on recent experience at other companies.
Former UBS banker Budenberg joined UKFI at the start of 2010. Former Bank of America Merrill Lynch banker O’Neil joined in October 2010.