Broker snap: Hester exit causes greater uncertainty for RBS, says Credit Suisse

13th Jun 2013 09:01

Royal Bank of Scotland (RBS) surprised the City on Wednesday night by announcing that Chief Executive Officer (CEO) Stephen Hester has agreed to leave the group after five years.The boss, praised widely for his work for turning the bank around following its government bailout in 2008, said he was stepping aside as the lender prepares for a re-privatisation. Credit Suisse gave its initial thoughts on the news in a research report on Thursday morning, saying that while a Hester exit had been speculated in the past, "it still comes as a surprise in terms of timing".The broker explained: "As recently as this weekend an interview with Stephen Hester was published in the FT where it was reiterated that he wanted to 'see the job through' which is taken to mean lead the reprivatisation. We actually think that his departure is related to the reprivatisation process, with the board looking for someone who would commit to staying at the bank for three-four years beyond the reprivatisation process."Credit Suisse said that the resignation could cause "deeper restructuring uncertainty", intensifying the debate about the structure of the group ahead of the report by the parliamentary banking commission.The broker reiterated its 'underperform' rating and 265p target price for the shares, saying that RBS is its "least-preferred UK domestic bank and one of our least-preferred European banks"."Stephen Hester is generally seen as having done a good job and we expect the news to be taken negatively," Credit Suisse said.The stock was down 6.14% at 305.6p by 09:22 on Thursday morning.Weighing further on the shares on Thursday morning was Deutsche Bank which cut its rating for RBS from 'hold' to 'sell'.