Hester to step down as RBS chief executive

Stephen Hester will be stepping down as group chief executive of RBS later this year.

Commenting, Hester said:

We are now in a position where the Government can begin to prepare for privatising RBS. While leading that process would be the end of an incredible chapter for me, ideally for the company it should be led by someone at the beginning of their journey. I will therefore step down at the end of this year to allow a new CEO to lead the Group in this next stage. Over the coming months I will put all my effort into completing the final recovery and continuing to build a strong customer focused culture. I thank all of the people of RBS for their support and wish them all the best for the future.

The search for his successor will begin immediately, led by chairman Philip Hampton, and will consider both internal and external candidates. Hampton said:

On behalf of the Board I would like to thank Stephen for his leadership and dedication over the past five years. In the midst of a major crisis, he accepted the challenge of stabilising the bank, turning it around, and putting us in a position where we can begin to plan for returning the organisation to the private sector. His achievements have been considerable.

We will continue Stephen's work to remove the barriers to privatisation over the next year and continue to do everything possible to support the British economy. Stephen will be leaving RBS in a vastly improved position that many would have thought impossible five years ago.

At the start of 2012, Hester told City A.M. he was struggling to run the bank as a fully commercial enterprise due to political pressures, and that he took a risk paying below-market rate for the top bankers.

Hester will retire with 12 months pay, worth £1.6m, but no bonus for 2013, in line with his contract.