PLANS to offload Britain’s state-backed banks into private hands were dealt a blow yesterday after the man tasked with the responsibility quit after a year in charge.
Jim O’Neil, a banker who had previously spent 17 years at Bank of America Merrill Lynch (BoAML), announced his departure from the role of chief executive from UK Financial Investments (UKFI), which is responsible for finding an exit for the government from its bailed out bank holdings.
The departure comes a day after the planned sale of 631 branches of state backed bank Lloyds Banking Group to the Co-operative collapsed, forcing the group to make hasty plans to shunt the branches onto public markets.
UKFI currently manages the stakes held in the Royal Bank of Scotland and Lloyds, as well as other stakes in Northern Rock and Bradford & Bingley.
The departure will be a blow for Treasury policymakers and chancellor George Osborne, with hopes of returning the banks to the market as soon as possible in turmoil.
O’Neil said: “I look forward to watching UKFI’s continued progress. It has been a privilege to work on behalf of taxpayers during such a challenging period for the banking sector.”
The departure comes at a sensitive time for the future of the UK’s state backed banks, with a chorus of voices – including the Archbishop of Canterbury Justin Welby – calling for a break up of state-backed banks.
O’Neil was appointed head of market investments at UKFI in October 2010, giving up a lucrative job at BoAML, where he was head of the international corporate finance and restructuring group.
He was made chief executive in April 2012 after stepping into the shoes of bank bailout architect Robin Budenberg after he left to become chairman of UKFI following the departure of Sir David Cooksey, who retired from the outfit.
Budenberg said O’Neil’s “depth of expertise” had been “crucial” for UKFI as it faced regulatory chance and the Eurozone crisis.
The search will now be on for a successor who can give renewed purpose and energy to the government’s plans to a speedy reprivatisation of the banks.