* Retail banking chief McEwan to take over in October
* Chairman says McEwan was only person offered CEO job
* Chairman questions whether break-up of bank needed
* Bank makes 1.4 bln stg H1 pretax profit vs yr ago loss
* Shares fall 3.3 percent
By Matt Scuffham and Steve Slater
LONDON, Aug 2 New Zealander Ross McEwan was confirmed as boss of Royal Bank of Scotland on Friday, tasked with laying the foundations for Britain to start selling its 81 percent stake in the bank.
McEwan, 56, had been tipped to take the reins after predecessor Stephen Hester was ousted by the government in June. He will take over in October with a brief to complete the bank's restructuring and lay the platform for its shares to rise above the government's break-even price so the stake can be sold.
Finance Minister George Osborne said McEwan had impressed with his vision of RBS as a "strong, UK-centred corporate bank", focused on supporting the UK economy.
"I think he'll provide the leadership RBS needs as the bank puts the mistakes of the past behind it, and the government seeks to get the best value for the taxpayer from the money the last government put into the bank," Osborne said.
Britain pumped 45.5 billion pound ($69 billion) into RBS to keep it afloat during the 2008 financial crisis
Chairman Philip Hampton, who oversaw the search for Hester's successor, said McEwan "emerged as the best candidate" and was the only person to be offered the job after the bank had considered internal and external options. His promotion comes less than a year after he arrived to run RBS's retail arm.
McEwan joined RBS as CEO for UK retail in September from Commonwealth Bank of Australia and is considered a safe, politically acceptable choice who will increase the bank's focus on retail and commercial banking.
"It's really important for the UK economy to have this bank back up and running," McEwan said. "It's a major responsibility for me to guide this organisation to focus very strongly back on our customers and I'm looking forward to that opportunity."
Hampton said he did not expect the appointment to mark a change in strategy as RBS had already refocused as a retail bank under Hester's stewardship, shrinking its investment bank to account for 20 percent of operating profit compared with 60 percent prior to its rescue.
Hester oversaw a mammoth restructuring, shedding some 900 billion pounds of non-core assets, but the bank has come under pressure from lawmakers to further slim its investment activities. He resisted the demands, saying the investment bank provided crucial services to RBS's corporate clients, and the issue caused friction with Britain's finance ministry.
The government wants RBS to be less complex and more like its part-nationalised rival Lloyds Banking Group, which is heavily focused on domestic lending.
McEwan's job is also complicated by Osborne's decision in June to commission a review into whether RBS should be split up, with its remaining toxic assets hived off into a 'bad bank' theoretically leaving the 'good bank' better placed to lend. Britain's finance ministry is conducting the review, with the help of investment bank Rothschild, and will announce its findings in the autumn.
Hampton said the bank had looked at hiving off toxic loans in the past and had explored the option with Britain's finance ministry at the end of 2010 and in 2011 but the Treasury rejected the option at that time.
"The thing that stopped it happening in the past is really the complexity, the state aid rules, and, whether, especially now, it's worth it given our non-core assets are much smaller than they were," he said.
RBS shares are valued at 407p on the government's books but are trading well below that level. A sale of the government's shares is therefore likely to be at least a year away, unlike at Lloyds, where the government is set to start selling its shares soon. Hester said he believed RBS could be in shape for privatisation by late 2014 "provided there aren't new hurdles that arise".
RBS made a pretax profit of 1.4 billion pounds ($2.1 billion) in the six months to the end of June, from a loss of 1.7 billion a year before. That was below the average analyst forecast of 1.6 billion pounds and its shares were down 3.3 percent at the market close leaving taxpayers sitting on a paper loss of 10 billion pounds.
McEwan will be paid an annual salary of 1 million pounds, less than the 1.2 million Hester received. He said he did not want to be considered for an annual bonus for the remainder of 2013 or for 2014.
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