Tag Archives: Stephen Hester

It’s Different Attitudes……….

American father to his son: ” See that man son? That’s Stephen Hester. He’s Chief Executive of the Royal Bank of Scotland. That’s a VERY big bank and the British government hired Mr Hester to put things right after it was left in a bit of a mess. He’s very successful and if YOU study and work hard, perhaps one day you can be as successful and as well-known as Mr Hester.”

English father to his son: “See that man son? That’s Stephen Hester. He’s a fat greedy capitalist bastard who thinks he’s better than us. It’s hard-working people like me who pay his wages. We work and he just sits behind a big shiny desk and gets millions. Make sure that you don’t turn out like him.”

In defence of Stephen Hester!

RBS Chief Executive Stephen Hester has a very challenging job. He has to get to grips with the quagmire of accounting and organisational disorder bequeathed to the taxpayer by his predecessor Sir Fred Goodwin. So far, Stephen Hester does not appear to have put a foot wrong but in spite of that, he is fast becoming as much of a pariah as Fred the Shred.

Why is that?

At the highest levels of the Financial Services Industry, especially Banking, , there is a staggering shortage of REAL management talent.

In 2008,  when  the Labour government realised (too late ) that the entire industry was in trouble and that changes needed to be made at the highest level, the pool of talent on which  the then Chancellor could call, was extremely limited.

Prior to taking over at  RBS , Hester had been appointed non-executive deputy chairman of the newly-nationalised Northern Rock. He had been appointed by Chancellor Alistair Darling.  Subsequently (in September 2008), he was asked to take a non-executive position on the board of Royal Bank of Scotland.

Throughout his tenure at Northern Rock and right up until November 2008, his “day job” was Chief Executive at British Land. However, the vast bulk of his career had been in banking – 19 years at Credit Suisse First Boston followed by three years as Chief Operating Officer at Abbey. His knowledge of banking and the debt markets was beyond question – although at the time , there was some question as to his political skills  – which he would certainly need in his new RBS job.

His job was to turn around what has once been a bank with a share price of 700p, which , at the time of his accession, had tumbled to a mere 50p. That was in 2008 when the British Government bought about £45 billions’-worth of stock, giving it a 84% share of the bank.

The job which he was being asked to do was by far the most daunting and high-profile within the the broken banking industry.

In addition, both the politicians and regulators had begun the process of taking the focus off their own shortcomings and ineptitude by creating the Banker Bogeyman. The Fatcat. The incompetent Greedy Bastard who only cared about his bonus.

Unfortunately, even the white-hatted good guy saviours such as Hester were also tainted.

At no time did a politician stand up in his defence and point-out that Hester was a government hireling and was on their (our) side.

The Labour government of the 2000s,  as well as the unfit-for-purpose Financial Services Authority had failed in their duty and had all but lost control of the banking industry. The bankers had involved themselves in products that not-only they but even the Bank of England did not understand.  Chief Executives such as Fred Goodwin had begun to believe in their own infallibility and the government believed that the good days would roll-on forever.

This highly combustible scenario was overseen by a collection of Bank Directors who had developed lack of understanding and incompetence into an art-form. Most of them have been quietly retired when, in actual fact, many should have been prosecuted for not doing their job.

For those of you who may not understand, in the average bank boardroom, there is a culture of what can best be described as that of self-congratulatory Gentlemen’s Club Machismo . When a Chief Executive breezes into a Boardroom – especially a highly-technical accountant CEO such as Fred Goodwin, there are dangers. Not to him – but to  the directors.

The director is expected to question him but he knows that he has no real idea of what the CEO talking about. The director also knows that the CEO could expose his total lack of knowledge to the other directors. There is an unspoken understanding: ” Try to f*** me over in front of the Board at your peril!”

Exactly the same applied  (still applies) to the politicians.

Credit Derivative? The Zero Lag Stochastic Indicator? The Abnormal Earnings Valuation Model? What do they all mean? Best not to ask……………………..

So it was in this post-Lehman atmosphere of surprise, shock and ignorance that Stephen Hester was headhunted by Alistair Darling and Gordon Brown. Although details are not in the public domain, he (Hester) negotiated himself a legally-binding contract  – and along with it, a remuneration agreement. (If any politician feels the urge not to honour that contract, one suspects that by the time the matter had been dealt with by the Courts, it would have been far cheaper to have maintained the status quo.)

In late 2008, the bankers had already “spooked” the politicians and obtained a total bailout of £450 billion. Because the politicians were still in shock, Hester would have been able to name his price  – and who could blame him? He was on a shortlist of ONE.

Meanwhile, the politicians needed to take the pressure off themselves  – so very soon a campaign was started. Its primary purpose? To vilify all bankers.  The most visible aspect and most populist aspect to focus on was the “unacceptable level of remuneration” – and so the headlines and political bleating began.

The fact is that banks are NOT the Civil Service – they are constituted as companies which issue shares. We, the taxpayers are NOT shareholders.

A bank such as RBS is a shareholder-owned company  but none of them have any legal right to demand when, how or what a Chief Executive is paid. That is between the CEO and his Board.

Shareholders can be as unhappy as they want to be but the best that they can do is to make their views known. A Bank Board is under no obligation to take any notice of moaning shareholders.

That, in fact is the only reason why senior politicians such as Cameron, Clegg and Cable can do nothing but whinge.

Finally, the government did not “bail out the bankers”. It bailed out the banks in order to ensure that you and I did not lose any money. Hopefully they also hired competent people to sort-out the mess and effectively, start again.

Stephen Hester is part of that renewal process. He is paid what appears to be an obscene amount of money primarily because of his technical know-how but also for his scarcity value.

Therefore it is most unfair for him to be referred-to as a “fat-cat” or any other derogatory label that we have been brainwashed into applying to all bankers.

Had he said on Day 1 : ” My fee to unravel this multi-billion pound mess will be £20 million. Take it or leave it,” the politicians would have snatched his arm off!

This year, he has received a bonus of £1 million  and the political bandwagon is beginning to creak as they all jump on to criticise his “greed”. (The bandwagon is creaking particularly enthusiastically now that Boris Johnson has  also joined the moaning political posse!!)

To add some perspective to the incredible complexity and scope of Hester’s task, you may be surprised to hear that the RBS annual legal “spend” is about £200 million!!

Stephen Hester deserves every single penny that he has managed to screw out of RBS and its carping political custodians.

Piggy Bankers

Here’s the story so far. A bank lends money to anyone who can steam up a mirror, the Chief Executive is sacked but manages to hold onto a huge pay-off and an eye-watering pension. The government then raids the Bank of England every couple of months and continues to scoop-up more and more money which it tips into the bank by the BILLION.

The Investment bankers then take this free money and use it to gamble on the Stock Exchange which is heading upwards  because the government is also tipping  money into other banks and into the economy itself. Regrettably, the government’s munificence leaves it with huge debts but it has vowed to do ANYTHING for the banks because the banks USED to be an important part of the United Kingdom’s economy.

Unsurprisingly, the bankers’ “gambles” earn the bank some dodgy money. Unfortunately, they forget that in a rising market, any muppet can make a profit but nevertheless they demand huge rewards for their cleverness – in the shape of bonuses.

The unelected Lord Myners who is masquerading under the soubriquet of “City Minister” announces that at least 5,000 bankers in the United Kingdom will earn more that £1 million EACH. That’s a total of £5 BILLION. One would be forgiven for assuming that even if they’re on a 10% commission, they should have produced profits of at least £50 billion. However, in reality, £50 billion represents just one quarter of the £200 billion “quantitative easing” bail-out money handed over to them in the few months by a government paralysed  by the fear of upsetting the banks. The total that has been pumped into the banks since October 2008 is £850 billion!!

Taking the Royal Bank of Scotland as an example, their investment banking division made £6 billion this year and they intend to pay 25% of that in bonuses. That is an outrageous figure and should be stopped. Especially as the rise in commodity prices, which has fuelled most of their profits, had absolutely NOTHING to do with them.

The unelected Lord Mandelson calls for restraint.

The Royal Bank of Scotland will be paying a total of £2 billion in bonuses to its staff. There is an unsubstantiated rumour that the government is being blackmailed by the RBS board who say that they will resign if the government somehow manages to block the bonuses. They are all forgetting that they are the same people who were around when the bank was run into the ground. A year ago, they faced the real prospect of spending   Christmas 2009  paying for their children’s Christmas presents out of their Jobseekers Allowance. That is how close it was.

Unfortunately, they were saved by the government, so they never actually managed to set foot in the real world. Hopefully they will –  just after the next banking crisis.

VInce Cable has said that the government should call the bankers’ bluff. If they want to resign – let them resign.

The directors’ duty is to the shareholders which means that they have to listen-to and obey the shareholders. The majority shareholder at RBS is the United Kingdom Government. The Government should step in today and sack the lot of them. The bankers are playing a very high-risk game. Mind you, that’s what they do for a living – but with taxpayers ‘ money, supported by a taxpayers’ guarantee that if they lose their stake money, the taxpayer will provide them with more. 

The newly-anointed Chief Executive of RBS, Stephen Hester was considered to be a “government man” – a steady hand on the tiller. However, even he is showing dissent by saying that the bank will lose “valuable staff” if it is unable to pay bonuses with lots of noughts.

The argument that bonuses need to be paid in order to attract and retain “talent” is exactly the same fatuous argument which is bankrupting most football clubs.

There are two months left before the bonuses are supposed to be paid. Let us hope that everyone concerned uses the intervening time wisely.

(Barclays is about to increase the pay of 22,000 investment bankers by 150% – in lieu of the proposed cut in bonuses. Clever!)

It will be long and hard.

” We all lose interest after making a deposit and a withdrawal”

We are all looking forward to the banking industry’s return to communication through facts and figures. In the last year-or-so they have all shown an increased predilection for the medium of the euphemism, metaphor or cliché.

The RBS Chief Executive Stephen Hester is our favourite banking boss – a straight-down-the-line guy  with whom you can shake hands without  having to count your fingers or look for your watch. Nevertheless, he too has succumbed to the inanities of modern “bank-speak”.

Yesterday,  RBS announced 3rd quarter losses  of £2.2 billion.

Stephen: “Although conditions have improved over the last three months, they remain ‘fragile'” and “The RBS recovery will be a marathon , not a sprint.”

He added that as far as executive bonuses are concerned ” Everyone is treading a delicate tightrope.”  A tightrope only has two pertinent qualities: 1. It is a rope and 2. It is tight.

He could take a leaf out of Mervyn King’s lexicon of generalities; avoid figures of speech and avoid facts as well . This is from yesterday’s pronouncement on the economy: “Households have reduced their spending substantially and business investment has fallen especially sharply. A number of indicators of spending and confidence, however, suggest that a pickup in economic activity may soon be evident.”  Mervyn has the right idea – there is absolutely no point in clouding issues with facts.

Spygun’s all-time favourite: ” We can hear a Niagara in the distance but have no way of knowing how soon we’ll  hit it.”  (That was about a sudden economic downturn).

Stephen should hire a new metaphor scribe because if this recession continues for too much longer all the good metaphors will have been used up.


Not a terrorist?

Major Nidal Malik Hassan opened fire at Fort Hood and shot dead 12 fellow- American soldiers and injured over 30 others. Is this another terrorist “sleeper”? Probably not.

Fort Hood is the world’s biggest Army base and is (of course) in Texas. The soldiers that Hassan shot were men who were undergoing last-minute medical checks, dental treatment etc before being deployed to Iraq and Afghanistan.

The shooter was himself shot but is not dead. He is a long-serving American serviceman, a trained psychiatrist and a devout Muslim. It is known that he was very unhappy about going to Iraq and Afghanistan.

Major Hassan had previously faced harassment over his Palestinian ethnicity, although he was born in Virginia. Recently, he had expressed a wish to leave the army.

A picture is emerging of a disgruntled loner who was increasingly at-odds with  colleagues as well as current American military strategy – especially the fighting in the Middle East and Afghanistan.

In spite of a slight outbreak of “insurgent hysteria” in the media, this look like no more than a sad and lonely man who had been taken way-past his personal breaking point.


One of Westminster’s most popular and colourful MPs, Sir Nicholas Winterton has been accused of bottom-slapping a fellow MP. His accuser is Ms Natascha Engel MP, who said: “I can’t believe it, Sir Nicholas just slapped my bottom.”  The heinous offence took place in the Commons eatery and although Sir Nicholas recollects that soup which he ordered, he has no recollection of the assault. 

There is only one thing to say to the spectacle-wearing Sir Nicholas:See full size image



Sir Nicholas’  eyesight may have also been a contributory factor in his claiming (together with his wife and fellow MP, Ann), £165,000 expenses on a London property which they already owned.

Antonio Polverino scores again!

There are two types of organisation that have made such huge financial rods for their backs that it looks as if they are beyond help.


At first, it appears that they have little in common but if you look closely, you will see that they do share two very basic elements. The first is a weak and often unskilled boardroom and the other is direct access to the public’s money. Another interesting similarity is that their personal incomes bear little relation to how they perform long-term. That has resulted in near bankruptcies within both types of organisation with the genuinely solvent ones being very much in the minority. Continue reading Antonio Polverino scores again!