Royal Bank of Scotland (RBS) has been ordered to delay naming its new strategy chief after a warning from the Treasury that it is risking a conflict of interest row.
Sky News has learnt that the taxpayer-backed lender has been told to wait until after its annual general meeting (AGM) next week before publicly confirming that Oliver Holbourn is joining RBS.
Mr Holbourn recently stepped down as chief executive of UK Financial Investments (UKFI), where he spent several years managing the Government’s stake in the bank.
As the steward of taxpayers’ 71% shareholding in RBS, UKFI has the decisive vote on key resolutions at next week’s AGM, including its remuneration report.
Sources said the Treasury was seeking to avoid the appearance of a conflict of interest by forcing RBS to delay announcing Mr Holbourn’s appointment as its new head of strategy.
The bank’s talks with Mr Holbourn were revealed by Sky News earlier this month.
Mr Holbourn is understood to have been recused from any issues directly relating to the taxpayer’s RBS stake for several weeks before he left UKFI, which was set up during the financial crisis to manage the public stakes in Britain’s bailed-out lenders.
In his new post, Mr Holbourn will play an important role in making RBS a more attractive investment proposition for institutional shareholders – a task made significantly easier by the bank’s £3.6bn settlement with the US Department of Justice for mis-selling mortgage-backed securities.
Mr Holbourn stepped down from UKFI as it was being subsumed into another Treasury unit, UK Government Investments (UKGI), which oversees publicly owned assets such as the student loan book and a stake in National Air Traffic Services.
He joined UKFI in 2013 as its head of capital markets, placing him in charge of designing a strategy for offloading the taxpayer’s vast stakes in RBS and Lloyds Banking Group.
The Lloyds privatisation concluded a year ago, netting taxpayers a modest overall profit, but the RBS sell-down has proved a more protracted affair.
George Osborne, Philip Hammond’s predecessor as Chancellor, did sell a £2.1bn stake in RBS in the summer of 2015, a deal which crystallised a £1bn-plus loss in the context of the price originally paid to bail out the lender.
The publicly owned shareholding in RBS is worth over £20bn at current market prices, with the shares languishing at less than half the Government’s original ‘in price’.
Charles Donald, a Credit Suisse banker, has been hired by UKGI to oversee the RBS stake as head of its financial institutions group.
The Office for Budget Responsibility (OBR) recently published unchanged forecasts for the privatisation of RBS shares.
According to the latest OBR report, the budget watchdog anticipates the Treasury disposing of £3bn-worth of RBS shares in each of the five financial years beginning in 2018-19.
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UKFI was established by the then Chancellor, Alistair Darling, to operate at arm’s length from the Treasury.
RBS and the Treasury declined to comment on Friday.