ROSS McEwan paid tribute to predecessor Stephen Hester's "remarkable" achievements at Royal Bank of Scotland as he took up the chief executive post on Tuesday.

 

He certainly seemed a lot more grateful for, and aware of, what Mr Hester had done in putting RBS back on a stable footing than Chancellor George Osborne. At the time of the bolt-from-the-blue announcement in June that Mr Hester was to step down, the talk was that the Treasury had played a big part in his exit.

Mr McEwan appears to be a worthy enough successor, but the Treasury's apparent desire to see a change at the top makes no more sense now than it did then.

Throughout Mr Hester's tenure, there seemed to be an undercurrent of friction between RBS and the Treasury. At times, you got the impression that the top brass at RBS was left to read about the political agenda for the bank in the London press.

Mr Hester, regarded widely as having put in a solid shift for all shareholders including the Government with its stake of around 80%, is to be commended for his patience in this regard.

He struck the right balance, running RBS as a commercial operation but with a keen awareness of the political agenda and the bank's responsibilities to the public given the majority state ownership which followed the institution's multi-billion pound bail-out.

Unfortunately, but certainly not unexpectedly, the political agenda for RBS appears short-sighted.

There is no doubting the Treasury has been champing at the bit to get a sale of shares under way before the next General Election in 2015.

It has achieved its goal in recent weeks of starting to sell the taxpayer's stake in Lloyds Banking Group, the institution formed by Lloyds TSB's rescue takeover in early 2009 of Halifax and Bank of Scotland owner HBOS.

The rest of the political agenda for RBS appears to revolve around a strategy of making the bank retrench, with a raft of sell-offs of overseas operations and a shrinking of its investment banking business. This sell-off of international operations has extended to apparently Treasury-inspired proposals to float US subsidiary Citizens.

The big problem with this agenda is that, by focusing RBS increasingly on a UK economy which looks either dull or grim and on the retail banking sector, more and more of the potential upside for shareholders, including taxpayers, is disappearing.

It was not all plain sailing for Mr Hester, who took over the top job at RBS in November 2008 after the bank found itself on the brink of collapse under his predecessor, Fred Goodwin. There was the massive disruption to customers caused by an information technology meltdown last year. And Mr Hester had to deal with RBS's part in the global scandal over rigging of the London Interbank Offered Rate (Libor).

There were also the semi-permanent rows over Mr Hester's bonus. It was easy to have some sympathy with the RBS chief amid all the sound and fury over remuneration, particularly given that investment bankers working for all the big players around the world were continuing to rake in huge rewards as if nothing had happened.

These are the same investment bankers whose behaviour helped trigger the global financial crisis in the first place.

Mr McEwan, who joined RBS little more than  a year ago as head of UK retail banking, is long enough in the tooth to know he is taking on a huge challenge.

While personable and at pains to emphasise he does not enjoy headcount reductions, Mr McEwan has already shown an ability to be tough in his short time at RBS. In May, he unveiled a restructuring of the retail banking division, which involves the axing of about 1400 jobs over two years.

He has also declined to give a commitment to retain branches even where RBS is the last bank in town, a stance at odds with that of Lloyds subsidiary Bank of Scotland. And he signalled about 10% of RBS's UK branches were likely to be axed.

Mr McEwan undoubtedly faces a big challenge in achieving his ambition of improving customer service while slashing costs in the retail banking division. Slashing costs and improving service do not often go hand-in-hand, whatever the management consultants might tell us.

The latest RBS chief is confident new technology, and a focus on enabling customers to bank on mobile devices, will bridge the gap. Only time will tell.

Mr McEwan, whose recent experience has been in retail banking, will have to ensure he is right across RBS's diverse operations, including its still-sizeable investment bank.

However, given his lengthy financial sector experience, dealing with the inevitable political interference could be the greatest challenge.

Mr Hester will be a hard act to follow.

Lloyds Banking Group chief executive Antonio Horta-Osorio will also be a formidable role model, as the Treasury looks over Mr McEwan's shoulder and breathes down his neck in anticipation of when it can start selling the taxpayer's stake.

But Mr Osborne should be aware that a change of leader at RBS at this critical juncture is likely to hold up the bank's recovery, regardless of how good Mr McEwan might be in the post.

Then again, as the architect of the UK's ill-judged and mis-directed fiscal austerity programme, it would not be the first recovery the Chancellor has held up.