Royal Bank of Scotland narrowing its search for a chief executive to replace ...

By Ruth Sunderland

PUBLISHED: 19:01 EST, 23 July 2013 | UPDATED: 19:01 EST, 23 July 2013

Royal Bank of Scotland is narrowing its search for a chief executive with Ross McEwan, the bank's head of retail, emerging as a strong internal candidate.

The bank has not yet made a choice on a successor for Stephen Hester and a number of candidates, including external ones, are still in the running.

McEwan, a New Zealander who previously ran the retail operations at Commonwealth Bank of Australia, joined RBS in 2012.

The bank may make an announcement as soon as its half-year results next week, though it still has to finalise its decision on the person, settle their pay and gain approval from UKFI, the government body that manages taxpayer stakes in the banks.

Several other existing RBS executives are also seen as serious contenders. They include Chris Sullivan, the head of corporate and business banking, who recently won praise for launching an independent review into lending systems and practices in the hope of extending up to £20bn of available credit to small firms.

Bruce Van Saun, the finance director, is another possibility if he can be persuaded to stay in Britain instead of taking up the job of running Citizens, the US arm of RBS.

So too is Nathan Bostock, head of restructuring and risk, who is to take over from Van Saun as finance chief. Rory Cullinan, who runs the bank's non-core division, is also a name in the frame.

The leading external candidate is said to be former HSBC banker Mark McCombe. Standard Chartered finance director Richard Meddings has also been widely tipped.

Observers are adamant chairman Sir Philip Hampton, who believes there are a very small number of credible candidates, is looking to appoint a boss from the mainstream retail or business side, rather than an investment banker.

RBS has scaled back its investment banking activities and is looking to concentrate on core lending in the UK.

Appointing an investment banker would attract criticism as 'casino bankers' have been blamed for high pay and risky practices in the aftermath of the financial crisis.

Although the new chief's pay package will be at a commercial level, Hampton is determined it will be designed to attract candidates to the job because they want a challenge to develop their career, rather than for lavish rewards.

Sources said that Hampton's views on pay have been communicated to headhunter Anna Mann and that candidates looking for bumper packages would be weeded out. Hiring a strong internal candidate would save the potentially large costs of buying out an executive from his or her package at a rival bank.

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