It’s never quiet in UK banking these days. In a fitting episode of handbags at dawn, Ana Botín, the chief executive of Santander UK, reneged on an agreement to buy 316 branches from RBS. The provisional sale agreement had been signed in the summer of 2010 when António Horta-Osório was running Santander UK. Santander wanted to expand its penetration of the small-business market and was prepared to pay £1.65 billion to do so.
A mole texted me to say: "Disaster. Both banks have lost two years and a lot of face!" I agree that Botín looks like a bolter and investors are puzzled at the abrupt change of strategy. But it is Stephen Hester, RBS’s CEO, who has the bigger problem. RBS had been ordered to divest the branches by the European Commission to break its dominance of business lending. RBS has only 14 months to find another buyer and in some respects, after Santander’s snafu, the branches are damaged goods.
Poor Hester has had an annus horribilis, starting with the public outcry over his putative bonus for 2011 and ending now with a snake on the big board of banking that snarls: "Go back to square one." And remember Hester has already waived his 2012 bonus because of a computer meltdown in June. So 2012 will be the second year in a row that he is confined to a base salary of some £1.2 million. No wonder saint Stephen always looks slightly petulant when captured on camera. He’s virtually doing charity work, yet no one appreciates that fact!