RBS axes 2000 as Hester ousted ahead of sell-off

RBS has lost around 35,000 staff since it was bailed out with £45 billion of tax-payers' money at the height of the banking crisis in 2008. The latest job losses are to go in its markets division – the investment banking arm of the RBS Group.

Mr Hester said RBS was "shrinking our markets business" and that would "regrettably involve some job losses". He said the announcement that he would be leaving was unconnected and he would remain to see the process through.

The job losses represents just under one-fifth of the investment staff, who number more than 11,000, a fraction of the workforce when RBS was a global investment powerhouse.

Dominic Hook, of the bank workers' union Unite, said Mr Hester's announcement would come as a shock to staff and said the union would be demanding an urgent meeting with management. He added: "With over 30,000 job losses over the last five years and major stress for RBS staff, there is likely to be a lot of anger over Stephen Hester's taxpayer-funded multimillion-pound exit package.

"After years of uncertainty it's time the bank and the Government ensured people and communities come first, not private profit."

However, Mr Hester stressed the bank was coming to the end of its restructuring period. He said: "RBS is increasingly able to look forward and do the job everyone wants it to do, whether that's serving our customers, very important, our share price, which is more than triple what it was - and, of course, the taxpayers' money to be got back.

"We are now able to start looking positively to the future of RBS and hopefully I have contributed to that."

Mr Hester is thought to have been forced by the Treasury to step down. He appeared to suggest last night he would have liked to have seen the job through to privatisation. "Of course I would like to have stayed because I feel I have been in the trenches with all of my people helping RBS to recover and privatisation would have been a fitting end to those endeavours," he said.

Mr Hester said it had been the board's choice to find someone new to lead the bank through privatisation but he was "completely comfortable with the rationale behind it". He said he was "co-operating amicably" and would "stick around as long as they need me".

Sir Philip Hampton, RBS's chairman, who praised Mr Hester for his "immense achievements" in picking RBS up from the "wreckage" of 2008, explained how the board had been thinking about a succession for some time. The search for a new chief executive would begin immediately. He said: "The acceleration of considering succession for a CEO role arises largely from the Treasury's determination to see the bank in a state where it can be returned to the private sector by the end of 2014."

A Treasury source, asked about whether or not Chancellor George Osborne was preparing for a firesale before the 2015 poll, said: "We have never talked about it in terms of a sale by the General Election. It's not about a particular point in time but protecting value for the taxpayer."

Mr Hester received thanks and praise from Mr Osborne and John Swinney, the Scottish Finance Secretary.

Mr Osborne hailed him for "having brought RBS back from the brink" and insisted the bank chief had "made an important contribution to Britain's recovery from the financial crisis".

Mr Swinney noted: "In difficult times, Stephen Hester has made a significant contribution to stabilising RBS and putting the bank back on track." He added that the UK Government must now "ensure a stable financial sector and a return for taxpayers".

Mr Osborne is due to spell out his intention for the futures of RBS and Lloyds – of which the taxpayer owns 81% and 39% respectively – in a keynote speech next week in the City.

Mr Hester's decision comes just days before a high-powered commission of MPs and peers is expected to recommend RBS be split into a privatised good bank and a nationalised bad bank.