Royal Bank of Scotland Faces Questions About Direction

LONDON - After years of restructuring and job cuts, Royal Bank of Scotland again finds itself confronted with an uncertain future.

A day after Stephen Hester, the chief executive of the part-nationalized British lender, announced he was leaving the bank, investors expressed their displeasure over the surprise move, sending the bank’s shares down more than 6 percent in trading in London on Thursday.

For many, the departure of Mr. Hester, a former Credit Suisse banker, raised concerns about how R.B.S. would navigate the British government’s planned share sale that could start as soon as the second half of next year.

After leading a mistimed acquisition of the Dutch financial giant ABN Amro in 2007, R.B.S., based in Edinburgh, received a multi-billion dollar bailout from British taxpayers, leaving the government with an 81 percent holding.

The stake, which is managed by government-owned UK Financial Investments, could take the rest of the decade to offload, and analysts warned that changing R.B.S.’s chief executive could add extra instability to the process.

“This resignation adds to the existing political and regulatory uncertainty surrounding R.B.S.,” Citigroup analysts said in a research note to investors on Thursday. “One should not underestimate the time it will take for the UK Financial Investments to exit from the 81 percent stake.”

Since the financial crisis began, R.B.S. has jettisoned around 900 billion ($1.4 trillion) worth of assets from its balance sheet, and cut roughly 40,000 jobs in a bid to bolster profitability.

The British bank says it will now stop selling a number of complicated financial products, including equity derivatives, through its investment banking unit, which has been pared back significantly to reduce exposure to risky trading activity.

The latest restructuring will lead to around 2,000 job cuts, or roughly 17 percent of the unit’s staff, mostly in Asia, according to a person with direct knowledge of the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

The departure of Mr. Hester, 52, by the end of the year will leave the bank without many of its current senior executives ahead of its pending privatization. The bank’s chief financial officer, Bruce Van Saun, an American, also will leave his role at R.B.S. in September to lead the firm’s U.S. unit, Citizens Financial Group, ahead of its planned initial public offering in 2015.

Analysts said a number of internal candidates, including the bank’s chief risk officer, Nathan Bostock, and the head of its non-core division, Rory Cullinan, could now be tapped for the top job at R.B.S.

A spokesman for the British lender declined to comment, adding that the search for a new chief executive had just begun and would potentially include both internal and external candidates.

R.B.S.’s chairman, Philip Hampton, said Mr. Hester’s departure had been as aimed at appointing a new leader who could oversee the privatization process from start to finish.

Whoever takes over at the part-nationalized bank, the person must deal with attempts by its largest shareholder, the British government, to jump-start domestic growth by calling on local financial institutions to increase their lending to consumers and companies.

While the taxpayers’ holding is controlled by a separate entity owned by the British government, questions remain whether R.B.S. can succeed in its restructuring when faced with political pressure over how the bank is run. The bank’s share price is currently around 40 percent below the so-called break-even point where local taxpayers would not lose money on R.B.S.’s bailout during the financial crisis.

“We continue to argue that the political wrangling has significantly impacted the franchise, especially in R.B.S.’s markets business,” Espirito Santo analysts said in a research note on Thursday. “Given the political interference not many will relish the opportunity to run R.B.S.”