Management Turnover as Change Agent

Monday, October 13, 2008

CEO Watch - Sir Fred Goodwin - Royal Bank of Scotland Update 2

Back in late August (see blog post) I placed Sir Fred Goodwin, the CEO of the Royal Bank of Scotland, on my CEO watch list.  It took a bank bailout from the government of the United Kingdom to get Sir Goodwin's head.  According to a story by Jon Menon in Bloomberg, in exchange for the U.K. government bailout,

..RBS will get 20 billion pounds, while HBOS and Lloyds will raise 17 billion pounds between them, the companies said in separate statements today. RBS Chief Executive Officer Fred Goodwin and HBOS CEO Andy Hornby will also step down
The Bank has appointed Stephen Hester as Sir Fred Goodwin's replacement as CEO.  Hester has been the CEO of British Land one of the largest real estate firms in the U.K.  He is
 expected to institute a number of radical changes at the bank in light of the financial crisis. According to a different story in Bloomberg Hester,
may get rid of securities trading and consumer banking in the U.S. and corporate lending in Europe. He also may sell assets that outgoing CEO Fred Goodwin bought last year from Amsterdam-based ABN Amro Holding NV.

"There are no sacred cows,'' Hester, 47, said on a conference call with reporters today. "We will make material changes to strategy.''
One can assume the executive change at RBS and the U.K. investment in the bank will make for a more certain situation going forward.  We will just have to wait and see.  Stay tuned.

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