“We are well ahead of where I thought we would be. We did not slip on as many banana skins as I thought we might,” Stephen Hester told a parliamentary hearing on Britain’s rescued banks.
“That gives me encouragement to believe we can hit all the ambitious targets we put out for the recovery of RBS.”
RBS is two thirds of the way to cutting the size of its balance sheet in line with its plan and had approximately halved the size of its investment bank, the heart of most of its problems during the crisis, Hester said.
“The core businesses of RBS are really good businesses… and they will provide the wherewithal to pay back the taxpayers.”
Hester, quizzed by parliament’s Treasury Select Committee on as part of a series of hearings on Britain’s bailed-out lenders, said the recovery should help the government meet its target of selling down its 84 percent stake.
“I would be hopeful that there will be a number of opportunities for share sales to be made at a profit over the next three to four years,” he said.
RBS, whose losses put it at the centre of the financial crisis, has also been at the heart of the debate on banker bonuses and the government’s role in changing behaviour.
News in December of strings attached to the bank’s bonus pool by the government, as part of conditions linked to an insurance scheme for bad debts, prompted Hester to criticise a growing “politicisation” of the bank and sparked rumours the board had threatened to walk out over the issue.
Hester reiterated that the board had not threatened to step down, but had been advised that some aspects of its operational freedom had been signed away as part of the insurance deal and could, if mismanaged, restrict the board’s ability to carry out its duties.
Hester declined to comment, however, on the size and form of the bank’s bonus pool, on which the remuneration committee would make a decision by the end of February, but he said the bank was a “part-prisoner” to market rates.
He also said political risks would rise ahead of a British general election, due by June.
Hester will be followed in front of the committee by Northern Rock chief executive Gary Hoffman and Lloyds Banking Group chief executive Eric Daniels.