13th June 2013
In the past, Mindful Money has discussed the pros and cons of an early return of RBS to the private sector. We suggested that were one to view it as a retail investor might, then the advice usually would be for taxpayers to hold on to their investment until they had at least seen their losses returned.(Well unless they were convinced they could achieve better returns on the capital elsewhere and we doubt the UK is going to invest in any other stocks in a hurry). But in summary, selling low is not a good strategy, so what’s the hurry?
The Labour Opposition say the hurry is because of the upcoming election and attacked the plans but it has also attacked the way in which RBS chief executive Stephen Hester has been moved on as the FT reports.
Many are suggesting that Hester’s departure is because he does not quite agree with the pace of the programme. RBS has as much as £40bn of still quite toxic assets. Could they be placed in a bad bank? Probably too late for that. So they will need to be managed with all the value possible extracted. Not an easy process.
But we return to another thing investors tend to believe – that you can’t really understand investing until you have come through a proper bear market. (incidentally most investors of five years standing or more definitely now understand this). But we wonder, once again, if something similar can be applied to bank chief executives.
Perhaps bank chief executives don’t really understand what it is like to run a bank until they have been through or cleaned up after a huge banking crisis. Such people are not exactly two-a-penny and Hester has done a difficult job reasonably well – commendable in the words of Ian Gordon analyst at Investec – and more than can be said for most of his peers. Let’s hope the Chancellor George Osborne, RBS chairman Sir Philip Hampton and more importantly the British public don’t come to regret the decision.