* McEwan vows to increase lending to support UK economy
* He has run RBS's retail business for past year
* New boss may create internal "bad bank"
By Matt Scuffham
LONDON, Oct 1 Royal Bank of Scotland's
new chief executive, Ross McEwan, took up his role on Tuesday
with Britain's finance ministry close to deciding whether to
make the part-nationalised lender break itself up.
The ministry is considering forcing RBS to hive off its
problem loans into a separate legal entity, in a move designed
to leave the rest of the bank better placed to lend. It is
expected to make a decision this month, according to government
Britain's government and central bank are concerned that
poor access to finance, particularly for smaller firms, may
thwart a sustainable recovery from the country's worst slump in
RBS is 81 percent owned by taxpayers after a 45.5 billion
pound ($73.7 billion) bailout in 2008. McEwan must satisfy
lawmakers who want the bank to slim down and focus on lending to
households and businesses.
McEwan said on Tuesday that RBS would support economic
growth in Britain. "A strong bank needs a strong home market,
and the UK is ours," he told 300 staff at RBS's London offices.
"I want RBS to stand firmly behind its customers with the
explicit goal of helping them succeed. That includes an increase
in our lending," he said.
Banking industry and political sources say the new CEO could
decide to create an internal "bad bank" to house RBS's problem
loans, even if a break-up is not recommended.
The sources say he may do this by enlarging and revamping
RBS's existing non-core portfolio, putting assets from the
group's Irish business, Ulster Bank, and British commercial real
estate loans inside it.
RBS and the Treasury declined to comment.
New Zealander McEwan, 56, has worked in retail banking for
more than a decade. He has run RBS's retail banking business for
the past year after joining from Commonwealth Bank of Australia
He was seen as a safe, politically acceptable choice who
would increase the bank's focus on retail and commercial
"Ross is a customer banker through and through and is
determined to transform the bank into a real asset for the UK
economy," RBS's Chairman Philip Hampton, who oversaw his
appointment, said on Tuesday.
McEwan succeeds Stephen Hester, who presided over a mammoth
restructuring of RBS during his four-year tenure but was ousted
in June with the government wanting fresh leadership to prepare
the bank for an eventual sale of its stake.
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.
Lloyds, which was rescued via a 20.5 billion pound bailout
in 2008, has returned to health more quickly and the government
began selling its shares in the bank earlier in September.