Political banking

If you want to steer a course for disaster, there are certain strategies which are better than others. "Never get involved in a land war in Asia" is a good one, as is "Never go against a Sicilian when death is on the line," and of course "when someone assures you that a high tension cable is powered down, tell them to touch it before you go near it." Along with those, I'd add never let politicians take charge of a bank:

The surprise announcement of Hester's departure [from Royal Bank of Scotland] came after the stock market had closed. It then emerged that Osborne met the bank's chairman, Sir Philip Hampton, last week to discuss the succession planning being undertaken by the bank, which is aiming for privatisation by the end of 2014.
A certain amount of reading between the lines suggests that it had become politically expedient for both the RBS board and the UK Treasury for Hester to leave, allowing him to carry off a certain amount of blame for RBS's failure to lend sufficiently to small businesses. Of course, this failure was because RBS, being a bank, likes leaving easy money in the form of high-interest loans to good prospects on the table.

Hester has had nearly five years at RBS, parachuted in with no real prospect of earning big bucks from the bank (due to ritual public outcry). As far as I can see, he's done a solid job navigating the bank back in the general direction of future profitability, albeit assisted by the BoE keeping interest rates at rock-bottom. But now he's thrown overboard by the board, no doubt because he's a political liability, to be replaced with someone else who's suitably unknown and politically inoffensive, in preparation for an eventual privatisation and claims of "getting taxpayer money back" (even if the taxpayer would be better off with a later and slower sale).

We trust the Government with getting "our money" back from the bank, but in reality the only interest the Government has is in seeming to get something done. If we want value for money from a bank in which we have a financial interest, letting its direction be controlled by politicians may not prove that fruitful.

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