3 Min Read
By Chris Vellacott
LONDON, Feb 4 (Reuters) - British insurer RSA has appointed former Royal Bank of Scotland boss Stephen Hester as its new chief executive with immediate effect, replacing Simon Lee who quit in December.
Hester, ousted from state-backed RBS last June by Britain's finance ministry, will take on an insurer that is reeling from an accounting scandal at its Irish business that left it with a 200 million pound ($325.89 million) hole in its finances.
The former investment banker has been praised by the government and investors for salvaging RBS by slashing risky assets and costs, but he has also become a lightning rod for criticism of bankers' hefty bonuses.
A spokesman at RSA said his pay for 2014 will amount to 1.255 million pounds, including a basic salary of 950,000 pounds, 285,000 pounds paid towards his pension and a 20,000 pound car allowance.
In addition, he is entitled to take part in a long-term incentive scheme worth up to 300 percent of salary but deferred until 2017. In 2015 he will be eligible for a bonus of up to 80 percent of his basic salary.
RSA's Chairman Martin Scicluna, who has run the company since Lee departed, will return to his usual role, the insurer said in a statement.
The company's Irish issues surfaced alongside hefty bills from extreme weather in Europe and Canada, prompting Scicluna to initiate a review that could lead to the sale of part of the business.
RSA has said it will publish conclusions from the review when it releases its annual results on February 27.
"The challenges of recent months have demonstrated that we have not lived up to our stakeholders' expectations and performed to our true potential," Hester said on Tuesday.
Hester was drafted into RBS following its 45 billion pound government rescue during the 2008 financial crisis. He oversaw a mammoth restructuring, shedding some 900 billion pounds of non-core assets, but the bank came under pressure from lawmakers to further slim its investment activities.
Hester resisted the demands, saying the investment bank provided crucial services to RBS's corporate clients, and the resulting friction led to his eventual departure.