LONDON—Royal Bank of Scotland Group on Friday promoted Ross McEwan,
the head of its retail bank, to the role of chief executive.
The bank, 81% owned by the British government, said Mr. McEwan will
start on Oct. 1. The New Zealander, who was widely tipped to take the
job, will replace departing CEO Stephen Hester, who announced his
decision to step down in June.
In accepting the job, the 56-year-old will be tasked with improving
returns at the bank, appeasing its political owners and eventually
returning it to private hands.
Mr. McEwan's first act on the job, however, was to renounce his bonus.
RBS said he would be paid £1 million ($1.5 million) a year in salary
and has agreed to give up his bonus for the remainder of 2013 and the
whole of 2014. Future pay awards will be put to a vote by shareholders
at next year's annual meeting.
RBS Chairman Philip Hampton said the appointment had been made after
"an international search," and added that no one else had been offered
the job. "This is a job that is among the most important and
challenging in the business world, and Ross has shown that he has the
drive and capability to take it on," he said.
U.K. Chancellor of the Exchequer George Osborne said Friday he
welcomed the appointment. Mr. McEwan "impressed me with his vision of
RBS as a strong, U.K.-centered corporate bank that is focused on
supporting the British economy," he said.
Mr. McEwan joined RBS in August 2012 from Commonwealth Bank of
Australia, where he ran the bank's retail business for five years.
Before that, he spent 18 years in senior roles in both the insurance
and investment business, including at the stockbroking business First
NZ Capital Securities and head of the National Mutual Life Association
of Australasia Ltd.
The New Zealander's background in retail banking has many analysts
predicting this could herald a further shrinking of RBS's investment
bank. On Friday, Mr. Hampton played this down, saying that most of the
restructuring at the bank was now complete.
Instead, the new CEO's task will be to try squeeze greater returns
from RBS's increasingly U.K.-focused activities. On Friday, the bank
said it turned a first-half profit on the back of lower impairment
charges and a swing in the value of its own debt. In the first six
months of 2013, RBS made a net profit of £535 million, after a loss of
£2.03 billion a year earlier. Banks book accounting gains or losses on
their own debt to reflect price they would pay if they were to buy it
back in the open market.
Revenue, however, fell to £10.61 billion from £11.69 billion a year
earlier, excluding the value of own credit and other special items, as
the group's markets division continued to post weaker results. "We are
running hard to stand still," said Mr. Hester.
Mr. McEwan will also have to digest various legacy issues. In the
first half of 2013, RBS booked a £185 million provision for wrongfully
sold insurance products, bringing its total provision to £2.4 billion.
The bank also put aside £385 million to cover undisclosed legal and
regulatory actions.
The U.K. government is currently evaluating whether to break up RBS
into a "good" and "bad" bank. Mr. Hester said he hadn't heard back
from the U.K. Treasury and the bank was in the "information delivery
stage."
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