The Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) has named Ross McEwan, the former head of its UK consumer division, as its new CEO, reports Gavin Finch and Howard Mustoe at Bloomberg. This comes at a time when the British government is pressuring the country’s largest publicly owned lender to reduce the size of its investment bank.
Royal Bank of Scotland Still Facing Possibility Of Government Mandated Breakup
RBS has seen its core business profits fall 17 percent so far this year as the company continues to deleverage. Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) is under heavy pressure to focus on consumer and corporate banking instead of investment banking and is still facing the possibility of a government mandated breakup. Even though McEwen has only been with RBS since last year, he also ran consumer operations for the Commonwealth Bank of Australia for five years before that, and tapping him is a clear sign that Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) intends to cooperate.
“In the current environment, selecting a retail banker is probably seen as the lowest-risk option,” said banking analyst Simon Willis. “He’s probably seen as the safest pair of hands.”
McEwen may also look like a good choice because the Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) consumer unit is one of the few divisions that has been growing, with profits up from £437 million to £477 million over last year. Stock prices have dropped by 4.5 percent, and have been ever lower at certain points this year, while RBS has made it clear that it expects profits to be weak or flat over the next year as it continues to recover. Bringing in one of the company leaders who has had recent success could satisfy investors that the company will be able to turn its fortunes around.
CEO Stephen Hester Third Executive To Leave This Year
Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) net income was just £142 million this quarter, a significant drop from £393 million last quarter. Outgoing CEO Stephen Hester will be the third executive to leave RBS this year after CFO Bruce Van Saun left for Citizens Financial Group and investment banking chief John Hourican resigned amid the LIBOR controversy.
With so many changes and declining profits, Moody’s has put the Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS)’s credit rating under review. McEwan is slated to take the helm of RBS on October 1.