THE chairman of part-nationalised Royal Bank of Scotland stepped down two months early today.
Sir Tom McKillop – originally due to retire in April – brought forward his departure to allow successor Sir Philip Hampton to complete an overhaul of the troubled bank's board.
RBS is set to be 70% owned by taxpayers after a year of financial turmoil which could leave it as much as £28 billion in the red, due to bad debts and write-downs on the value of past acquisitions.
Sir Philip, chairman of supermarket Sainsbury's, said Sir Tom had led RBS with "great dedication and integrity" through unprecedented financial turbulence.
But Sir Tom – who was paid £750,000 as chairman of RBS in 2007 – is likely to face probing questions from MPs on the Treasury Select Committee next week over the board's supervision of the crippled business.
RBS led a consortium which bought Dutch bank ABN Amro in 2007 at the very peak of the market, while its investment banking business was heavily exposed to the complex financial instruments hit by the credit crunch.
Sir Fred Goodwin – who led RBS on its acquisition spree before resigning in the wake of the first bank bail-out last October – will also answer to MPs next week. He has been replaced by former British Land chief Stephen Hester.
The Government stepped up its share of RBS in January after converting £5 billion in preference shares to ordinary shares, giving it a £20 billion stake in the bank.
Sir Tom said: "I wish Sir Philip and the board every success in this difficult financial and economic environment as they strive to restore the bank's prosperity."
Sir Philip added: "We are extremely fortunate to have the support of the UK Government and taxpayer as we restructure the group and we mean to repay that support as soon as is practicable".
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Terry Murden's Business Blog: ABN Amro wants to reclaim assets sold to RBS