Royal Bank of Scotland (RBS.L) said its Finance Director Nathan Bostock will leave to rejoin Spanish bank Santander (SAN.MC) after just 10 weeks in the job, dealing a blow to the state-backed lender's turnaround efforts.
RBS, which is 82 percent owned by the government, said Bostock had informed the board of his intention to resign and his formal resignation is expected soon. He will remain in position to oversee a handover of his duties.
Bostock has quit to return to Santander UK, where he had previously held several positions, including chief financial officer.
"I look forward to competing with him in the UK market as we strive to better the industry for our customers," RBS Chief Executive Ross McEwan said on Wednesday.
RBS was the top faller in a flat FTSE 100 .FTSE, down 1.9 percent by 0845 GMT (3.45 a.m ET). Shares in Santander were up 0.7 percent compared with a 0.1 percent rise in the European banking index .SX7P.
Analyst Chirantan Barua at brokerage Bernstein, who has an "outperform" rating on the stock, said the loss of Bostock was not good news for RBS but didn't change his view on the bank's recovery prospects.
"In a way, we see it as an endorsement that the current CEO is here to stay - a factor that would definitely have weighed on Nathan's decision to leave," Barua said.
Santander confirmed late on Tuesday that Bostock would be named chief risk officer and deputy CEO of its UK arm, which is due to be spun off and separately listed.
Given McEwan's recent appointment as RBS chief executive, Bostock may have opted to join Santander UK as the CEO role there could become available before the top job at RBS.
Santander UK Chief Executive Ana Botin has been tipped as a possible successor to her father Emilio Botin as chairman of the Madrid-based group, maybe once the UK arm is floated.
"Is he going for the top job in Santander UK? It's common knowledge that the CEO of Santander UK is seen as one of the likely candidates for Group CEO. In that case, Nathan - who knows the Abbey franchise well - definitely fits the bill," said Barua.
Bostock spent eight years at Santander UK and its predecessor Abbey National in a variety of roles, including as a board director, finance chief, head of products and marketing and head of financial markets.
He left Santander in 2009 to become head of restructuring at RBS, playing a pivotal role alongside former Chief Executive Stephen Hester in shedding 900 billion pounds from the bailed-out lender's balance sheet.
Bostock was appointed as RBS finance director on October 1.
The move is a blow to McEwan, who is conducting a review of the bank's strategy and operations, to be released in February.
McEwan has been hit by IT problems, which last month caused more than 1 million RBS customers to be left stranded after a computer systems failure.
Bostock was expected to play a key role alongside McEwan to create a 38 billion pound internal "bad bank" announced last month.
He had previously said he planned to leave RBS to join Lloyds Banking Group (LLOY.L) in 2011, but changed his mind after Antonio Horta-Osorio, the Lloyds chief executive, took a period of sick leave. ($1 = 0.6087 British pounds) (Additional reporting by Richa Naidu; Editing by David Holmes)