Standard Life chief Crombie called in to police Royal Bank

ONE of Scotland's most respected businessmen will today be appointed to police the activities of Royal Bank of Scotland, as the company seeks to distance itself further from the troubled Goodwin era.

The Scotsman can reveal that Sir Sandy Crombie, the chief executive of Standard Life, will take up the key position of an "investors' champion" at the part-nationalised company.

The role – officially known as senior independent director (SID) – will allow Sir Sandy to be the independent voice of investors on the board. The appointment will be announced to the Stock Exchange today.

Significantly, major institutions with large blocks of shares in RBS will be able to bypass the chief executive and chairman if they wish to voice criticisms of the bank's strategy.

It is understood that Sir Sandy, 60, who has a reputation for probity and straight talking, will take up the part-time role in July. He has already announced he is to step down from his £1 million-a-year role as chief executive of Standard Life sometime this year.

His new position will attract a salary of about £160,000 a year, a similar level to that of Bob Scott, the previous SID.

The Scotsman understands the decision has the blessing of government ministers and has been approved by UK Financial Investments (UKFI), the company set up by the Treasury to manage the state's stake in the banks.

Securing the services of Sir Sandy will be seen as a coup for RBS – 70 per cent owned by the taxpayer – because he is one of the few senior figures in the financial services industry in Scotland who has been untainted by the meltdown in the sector. It is also another significant step in the company's efforts to distance itself from the regime of former chairman Sir Tom McKillop and former chief executive Sir Fred Goodwin.

One of Sir Sandy's key tasks will be to speak to investors to reassure them the board will properly police the activities of RBS's senior executives, including chief executive Stephen Hester.

Both the bank and the government wanted a senior figure, who had himself been a chief executive, to represent the major instructional investors on the board and ensure that no one individual acquired the same level of power that Sir Fred wielded.

Mr Hester and new RBS chairman Sir Philip Hampton have acted swiftly to clear out almost all of the previous board, which was heavily criticised for allowing Sir Fred to drive through controversial deals, including the purchase of a large part of Dutch bank ABN Amro.

Sir Sandy's appointment will take the number of RBS board members to ten. The previous board, of 17, was thought by some in the City to be too cumbersome, and its size was seen as a factor in what critics viewed as a failure to control Sir Fred's acquisitive instincts.

It was recently announced that deputy chief executive Gordon Pell, a member of the board, will retire from the part-nationalised bank early next year at the age of 60. Finance director Guy Whittaker stepped down from his post – and the board – at the beginning of this month.

Sir Philip is set to appoint two further board members, with speculation they could be senior figures with international banking experience.

Sir Sandy's appointment, concluded after a process that involved headhunters, also puts a senior Scot back in a important position at RBS. In the McKillop era, there had been criticism that the bank was "too Scottish", but the recent changes had left few Scots on the board.

The move to appoint Standard Life's chief executive fits in with Sir Philip's strategy of finding a completely new board to guide the bank through the current crisis.

At the time of the board clear-out in February, he said: "With several directors completing two or more terms, or otherwise wishing to retire, now is the right time to reduce the size of the board, while ensuring an appropriate level of continuity in its key committees."

Sir Tom was effectively forced out of the board in February, as was BP chief executive Peter Sutherland and Mr Scott.

As head of Standard Life, Sir Sandy led the insurer through its controversial demutualisation and he will leave the business with a multi-billion capital "buffer" to cushion it against any further market turmoil. Its financial groups surplus – a measure of the strength of its balance sheet – fell only £100 million during the first quarter of this year to £3.3 billion.

In the past, he has not been afraid to voice his criticism of the leadership of the banks. In an interview with The Scotsman just before Christmas, he delivered a withering verdict on the management of some of the country's crisis-hit banks, asserting that it was a "no-brainer" that some of them would be "destroyed" by the freezing of the commercial money markets.

Sir Sandy, knighted in the New Year honours, asserted that if banking executives had seen the credit crunch coming, there was no evidence they did anything to prevent its impact on their businesses.

Although he did not name the institutions, it was clear that his criticism of the reliance of banks on financing by the commercial markets was aimed at the likes of RBS and HBOS.

He explained: "It would seem to be the case that those who were more reliant on the availability of these commercial money markets did not perceive there was a risk of them drying up. They presumed that those markets would be there every day which, as has been seen, was not a valid assumption.

"So if the supply of money dries up, it is a complete no-brainer that some business models would be destroyed by that."

Although his appointment is likely to be widely welcomed in the City, there may be criticism that his background is in insurance, not banking.

RBS last night refused to comment and said the search was still going on for three new non-executive directors.

Jobs axe swings across UK and more gloom lies ahead

A FRESH wave of job losses hit banking, defence and the media yesterday, with warnings of further cuts to come.

Lloyds announced that 210 jobs would be cut by January 2010 – the second tranche from the banking giant this week after the 625 redundancies disclosed on Tuesday.

The Unite union said that almost 2,500 jobs had now been slashed in recent months by the Lloyds Group alone as part of a huge cull in financial services, and national officer Rob MacGregor said: "Another day and another group of finance workers have been devastated by job losses at the Lloyds Banking Group.

"Unite is angry that employees continue to live with ambiguity about their futures. The bank must, as a matter of urgency, tell staff of its long-term plans for the workforce."

Lloyds said the latest cuts were the result of a change to the structure of its Direct Channels business, which covers telephone banking and digital banking services, including internet banking and mobile telephone banking.

Defence firm QinetiQ will axe 400 jobs, despite a 22 per cent rise in profits, while a further 2,100 jobs were at risk after the Birthdays greetings card business went into administration.

A QinetiQ spokesman said: "Overall, the UK business has not grown at all in the last year and we have seen a 23 per cent fall in income from our traditional defence research market, a fall of some £38 million."

Clinton Cards, which owns the 332-store Birthdays chain, said it had taken the "difficult decision" that it could "no longer continue to provide funding to its loss-making subsidiary".

Clinton Cards operates 692 stores, employing about 6,200 staff in total. These workers are unaffected by the move, and the company said the Clinton stores would continue to trade as normal.

The Prospect union said workers at QinetiQ would be "outraged" at the job cuts, especially as it followed a pay freeze among the firm's 7,000 UK staff.

Elsewhere, the Daily Mail & General Trust announced plans for a further 500 job cuts across its global business.