* RBS says implementing plan announced in February
* No preferred candidate identified for CEO role-sources
* Internal, external candidates still being assessed-sources
* Strategic changes unlikely until new CEO appointed-sources
By Matt Scuffham
LONDON, July 25 Royal Bank of Scotland
on Thursday ruled out another shake-up of its investment bank
and sources familiar with the matter said such strategic changes
were unlikely until RBS appoints a new chief executive.
"We announced a restructure of our markets business in
February. We are implementing that plan and the board is not
considering plans for further restructuring," RBS said in a
statement to Reuters.
The Financial Times had reported that senior executives were
discussing dispensing with a standalone investment banking
operation and integrating it with corporate banking.
RBS, 80 percent owned by the government since the financial
crisis, said in February it would further reduce the "scale and
scope" of its investment bank after coming under political
pressure to focus on its domestic retail banking business.
The bank is searching for a successor to chief executive
Stephen Hester, who stepped down in June after the bank's board,
backed by Britain's finance ministry, decided RBS needed new
leadership to steer it through privatisation.
Hester, who admitted to a strained relationship with
government, had resisted further cuts to RBS's investment bank
having already overseen a massive shrinkage of the business in
his four-and-a-half years at the helm.
Investment banking now accounts for about 20 percent of
RBS's operating profit compared with 60 percent before the
government pumped 45.5 billion pounds ($69.9 billion) into the
bank to rescue it in the 2008 financial crisis.
The bank has yet to select a preferred candidate as Hester's
successor, according to sources with knowledge of the
recruitment process, and reports the new CEO will be unveiled
alongside next week's results may prove over-optimistic.
The board's choice will need rubber-stamping by the Treasury
and by UK Financial Investments, which manages the government's
stake in RBS and Lloyds Banking Group.
One of the sources said if an appointment were made next
week it was more likely to be an internal candidate as the
negotiations involved would be less complicated.
Ross McEwan, a New Zealander who was recruited to run RBS's
retail banking business in August 2012, has emerged as the
favourite. McEwan previously ran retail banking at Commonwealth
Bank of Australia, a background which fits with the
government's long-term strategy for RBS.
Another leading candidate, Mark McCombe, rejected an
approach, preferring to stay in his current job at fund manager
BlackRock, illustrating the difficulty in attracting
candidates from outside.
Pay constraints may also make the role less attractive to
external candidates. RBS has had to be mindful of public and
political criticism of executive pay and Hester has given up his
bonus in three out of the last four years.
Despite that, the sources said a number of external and
internal candidates remain on the short-list for the role and
Hampton is determined to undertake a thorough recruitment
process, benchmarking the bank's internal candidates against
A sale of Britain's stake in RBS is unlikely in the near
future with the shares trading well below the government's
break-even price. The bank's future is also complicated by an
ongoing review by the Treasury into whether it should be broken