RBS repayment 'could take decade'

Stephen Hester

Former boss Stephen Hester has warned it could take up to a decade for the taxpayer to be repaid its £45 billion stake in bailed-out Royal Bank of Scotland (RBS).

Mr Hester, whose departure from the 81% state-owned bank is due before the end of this year, told the Sunday Telegraph that privatising RBS was a long-term project.

He said: "My observation is that if the ultimately desired proceeds are £45 billion, then there has never been a privatisation that raises that much in one go. So, it is most likely that it would be, if you do it conventionally, four or five goes over 10 years. That's why I've always been confident that the state would get its £45 billion back."

His comments come as George Osborne prepares to use the Chancellor's Mansion House speech to signal the sale of the Government's shares in Lloyds Banking Group.
The first tranche of shares could be made available over the summer, with the preferred option thought to involve a sale to major financial institutions rather than to members of the public through a Tell Sid-style offer. Such an accelerated bookbuild process would allow the Government to sell a stake in Lloyds within a time period of 48 hours, the newspaper reported.

Despite being pushed from his job amid speculation over political pressure, Mr Hester said he did not feel any anger about how he had been treated.

He added: "Part of me did want to see the job fully through, did want the champagne and roses of a successful privatisation. Another part of me thought goodness me, this job drives me nuts from time to time and how long do I want to do it for?

"I genuinely mean that I am comfortable with what has happened. I think RBS is in much better shape than we had any right to think it could be."

Meanwhile, it has been reported that Mr Hester could walk away from RBS having received as much as £14 million from the bank he joined in 2008 when it was on the brink of collapse.

The Sunday Times said that adding his salary, bonuses and up to £4 million in share payments he could still receive, the banker's pay package would average about £2.8 million a year. However, he could have earned up to £40 million under the package agreed when he was hired in 2008, while he is paid less than any other boss of a large British bank.

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